Key Takeaways from Pakistan’s Rs 18.9 trillion Budget 2024-25

Pakistan unveiled an ambitious budget for the fiscal year 2024-25, setting a challenging tax revenue target of 13 trillion rupees ($46.66 billion), a near 40% increase from the current year. Finance Minister Muhammad Aurangzeb presented the budget on Juen 12, aiming to secure a new bailout deal with the International Monetary Fund (IMF).

Finance Minister Aurangzeb, thanking Prime Minister Shehbaz Sharif and other leaders, highlighted the significant progress made despite economic challenges. He urged the nation to capitalize on this opportunity for economic revitalization, emphasizing the need for patience and collective effort to achieve sustainable development. The budget reflects a balance between ambitious revenue generation and necessary social and economic investments to stabilize and grow Pakistan’s economy.

Key Highlights of Pakistan Budget 2024-25

  • Total expenditure is estimated to be PKR 18.9 trillion ($67.84 billion) in 2024-25.
  • Ambitious Rs13 trillion ($46.66 billion) tax revenue target set for FBR
  • Non-tax revenue target of Rs3.5 trillion
  • Expects debt servicing of Rs9.8 trillion
  • Petroleum levy increased by Rs20 on petrol, dieselkerosene, gasoline to collect Rs1.28 trillion
  • Budget targets 3.6% GDP growth for 2024/25
  • Budget deficit is projected at 6.9% of GDP
  • BISP raised by 27% to Rs592 billion
  • Defense expenditure of Rs2.1 trillion.
  • Rs1 trillion allocated for pensions
  • Total subsidies are projected at 1.4 trillion rupees in 2024-25.


  • Targets total tax revenue of Rs13 trillion for 2024-25.
  • Targets total non-tax revenue of Rs3.5 trillion in 2024-25.
  • Pakistan aims to secure Rs30 billion from privatization
  • Target next external receipts of 666 billion rupees in 2024-25

Ambitious Revenue and Spending Plans

The budget outlines total spending of 18.87 trillion rupees ($68 billion). Key objectives include reducing the public debt-to-GDP ratio and improving Pakistan’s balance of payments. The fiscal deficit is projected to drop to 5.9% of GDP from the current year’s 7.4%.

Tax Reforms and Revenue Generation

The total budget outlay for fiscal year 2024-25 is estimated at Rs18.877 trillion while the estimated revenue of FBR is Rs12.97 trillion, which is 38% more than the current financial year.

To meet its targets, Pakistan plans to widen the tax base. Aurangzeb emphasized avoiding overburdening existing taxpayers. The budget proposes a significant increase in tax rates on salaried classes and the removal of several tax exemptions. Direct taxes are expected to rise by 48%, and indirect taxes by 35%. Non-tax revenue, including petroleum levies, is projected to increase by 64%.

Tax Policy highlights

  • New Tax Rates: For both salaried and non-salaried individuals, with progressive rates.
  • Property Taxes: Progressive tax rates on the purchase and sale of immovable properties for filers, late filers, and non-filers.
  • Withholding Tax: Expanded to cover all sectors to enhance documentation of the economy.

Inflationary Impact and Economic Growth

Analysts, including Vaqar Ahmed of the Sustainable Development Policy Institute, warned of the inflationary impact of the increased tax burden, especially given the large informal economy. The central bank, while cutting interest rates for the first time in four years to spur growth, also highlighted potential inflationary effects due to limited structural reforms. Inflation is projected at 12%, down from 38% last year, with GDP growth targeted at 3.6%.

Social and Economic Development

The budget includes significant allocations for social programs and development projects:

  • Public Sector Development Programme (PSDP): Rs3,792.2 billion, a 40% increase.
  • Benazir Income Support Programme (BISP): Increased by 27% to Rs592 billion.
  • Minimum Wage and Salaries: The minimum wage was raised to Rs37,000 from Rs32,000; government salaries increased by 20-25%, and pensions by 15%.

Subsidies and Support

  • Rs1.363 trillion allocated for subsidies in electricity, gas, and other sectors.
  • Rs1.777 trillion in grants for various regions and sectors, including AJK, BISP, Gilgit-Baltistan, and IT.

For Overseas Pakistanis

Initiatives to facilitate the Pakistani diaspora include an allocation of Rs86.9 billion for reimbursement of TT charges, facilitating remittances, and the establishment of an international call center for complaint resolution. Pakistan will also digitize and simplify the immigration procedure to facilitate overseas Pakistanis.

Energy Sector

The Finance Minister said 253 billion rupees have been allocated for the energy sector. Key allocation included Rs 65 billion for the Installation of assets performance management system on distribution transformers Rs 5 billion for electricity distribution efficiency, Rs 21 billion for 1200 MW coal power in Jamshoro. Government will prioritize renewable energy such as wind, solar and hydel power generation.

Water security

The water sector holds critical importance for food security, affordable power generation, and climate change mitigation. Consequently, the government has allocated Rs206 billion for water resources in the development budget for the next financial year. This investment will fund projects aimed at improving access to clean drinking water, enhancing agricultural productivity, and expanding hydropower capacity. Key allocations include Rs45 billion for the Mohmand Dam hydropower project, Rs40 billion for the Diamer Bhasha Dam, Rs18 billion for the Chashma Right Bank Canal, and Rs10 billion for the Pat Feeder Canal.

Healthcare and Food Security

The government has reserved Rs 27 billion for the Ministry of National Health Services and Regulations in the Budget 2024-25, up from Rs13.09 billion last year.

The National Food & Security Division will receive Rs41 billion compared to the current year’s budget of Rs8.8 billion, while the National Health Services & Research Division will get Rs27 billion.


Finance Minister Aurangzeb said a substantial amount has been proposed to improve infrastructure and educational facilities in 167 government schools in Islamabad. The government will also introduce a school meal program under which balanced and nutritious food will be provided to students of 200 primary schools in Islamabad.

Top universities such as NUML, NSU, NUST and COMSATS will collaborate with 16 degree colleges in Islamabad to offer skills and training to youth 


Agriculture, a vital sector of Pakistan’s economy, contributing 24% to GDP and 37.4% to employment generation, only managed to attract Rs5 billion for the next fiscal year from the incumbent government. Finance Minister Aurangzeb said that this fund will provide financing for planters, tractors, threshers, harvesters, and mobile grain dryers, which will help increase farm output.

Solar Panel concessions and EV Import Curbs

To promote sustainable energy, the government has announced incentives for solar panel manufacturing to reduce reliance on imports and save foreign exchange. Additionally, there will be import curbs on electric vehicles (EVs) to encourage domestic production and investment in the EV sector. These measures are part of the broader strategy to transition to a green economy and reduce reliance on fossil fuels.

Public Sector Development Programs get big boost

A significant allocation of Rs3.792 trillion has been announced for the Public Sector Development Programme (PSDP) for fiscal year 2024-25. These funds will be directed toward infrastructure projects, including transportation, energy and IT sectors to enhance connectivity and create millions of jobs, boosting economic activity across the country.

Aurangzeb that completion of ongoing projects will be given priority in the PSDP 2024-25.  He pointed out that 81% of resources have been allocated for the ongoing projects and the remaining 19% for the new projects.

Digital Transformation and IT initiatives

“The skills and talents of the country’s youth are second to none, which is the reason why IT exports will reach $3.5bn this year after the implementation of favorable policies by the government,” Aurangzeb stated.

  • More than Rs79 billion are being proposed for the IT sector in the financial year 2024-25, under which Rs7 billion is being allocated for digitization and reforms in the Federal Board of Revenue (FBR) to help expand the tax base and address loopholes in the system.
  • An IT park will be established in Karachi at a cost of Rs 8 billion while 11 billion rupees will be set aside for Technology Park Development Project in Islamabad.
  • Rs 2 billion have been allocated for Pakistan Software Export Board (PSEB) as compared to Rs1 billion last year to encourage exporters of the IT sector and internships in IT firms.
  • Rs20bn have been allocated for digital infrastructure information initiatives. 
  • The government plans to establish a National Digital Commission and a Digital Pakistan Authority to harness the potential of digital technologies for the socio-economic development of the country.

Defense Spending

The government has proposed an allocation of Rs2.12 trillion for the armed forces for the fiscal year 2024-25, marking a substantial increase of 17.6% compared to last year’s budget. This allocation, representing 1.7% of GDP, maintains the same proportion of the national budget as the previous year and constitutes 12.33% of projected current expenses.

The increased defense spending is the second-largest in six years, just below the 18% hike granted by the PML-N government in the final year of its 2013-18 tenure.

A notable aspect of the defense budget is the separate allocation of Rs662 billion for retired military personnel, which is drawn from the government’s current expenditure rather than the defense budget.

Service-wise share: The allocation distribution remains consistent with previous years, with the Army receiving 47.5%, the Pakistan Air Force 21.3%, the Navy 10.8%, and inter-services organizations 20.3% of the total budget. All branches of the military will receive an equal percentage increase of 22.3% in their respective allocations, demonstrating a rare parity in funding distribution.

Higher Taxes on Mobile Phones

The government has proposed abolishing the current slab-based sales tax structure for mobile phones, which varied based on pricing and had nominal rates. Instead, a flat 18% ad valorem sales tax will be applied to all mobile phones valued up to $500, covering three categories: imported completely built units, imported semi-built units, and locally manufactured completely built units.

For cellphones costing above $500, the new sales tax rates will be 25% ad valorem for imported completely built units and 18% for both imported semi-built units and locally manufactured completely built units. Additionally, there will be a 10% sales tax on imported personal computers, laptop computers and notebooks.

Sweeping taxes targets salaried class

Pakistan government increased tax liability for all persons earning more than Rs50,000 a month in Budget 2024-25. Tax slabs in Finance Bill 2024 reveal that the highest impact would be on anyone earning equal to or more than Rs6 million a year (Rs500,000 a month). The tax liability for these earners increases by Rs22,500.

Taxable Income (Rs)Rate of Tax
Not exceeding Rs600,0000%
Rs600,000 – Rs1,200,0005% of the amount exceeding Rs600,000
Rs1,200,000 – Rs2,200,000Rs30,000 + 15% of the amount exceeding Rs1,200,000
Rs2,200,000 – Rs3,200,000Rs180,000 + 25% of the amount exceeding Rs2,200,000
Rs3,200,000 – Rs4,100,000Rs430,000 + 30% of the amount exceeding Rs3,200,000
Exceeding Rs4,100,000Rs700,000 + 35% of the amount exceeding Rs4,100,000

Salaries and Pensions

During his speech, the finance minister said there was a proposal for the minimum wage to be increased to Rs37,000 from Rs32,000. He also said that salaries for government servants from grades 1-16 would be increased by 25% and by 20% for those in grades 17-22, along with an increase in pensions for retired employees by 15%. The government has announced a 15% increase in pensions for retired government employees.

Foreign Investment and CPEC

Efforts to attract foreign investment are ongoing, particularly from GCC countries, focusing on sectors like agriculture, livestock, mining, and tourism. The second phase of the China-Pakistan Economic Corridor (CPEC) aims to boost Chinese investment through special economic zones.

Climate Change Initiatives

  • Rs4 billion allocated for e-bikes and Rs2 billion for energy-saving fans.
  • Preparation of a National Climate Finance Strategy to attract global climate finance by October 2024.

Govt hikes petroleum levy to Rs80 to collect Rs 1.2 trillion

The federal government has decided to increase the maximum petroleum levy by Rs20 to Rs80 per unit on high-speed diesel oil (HSDO) and motor gasoline for the fiscal year 2024-2025, up from Rs60 per liter in the outgoing fiscal year. Additionally, the maximum levy on light diesel oil (LDO) and high octane blending component (HOBC) is raised to Rs75 per liter. The levy on superior kerosene oil (SKO) remains at Rs50 per liter, while for liquefied petroleum gas (produced/extracted in Pakistan), it stands at Rs30,000 per metric ton.

The federal government has set an ambitious target to collect Rs1.28 trillion through the petroleum levy in the fiscal year 2024-25, marking a 47.4% increase over the previous year’s goal. In the previous fiscal year, the government collected Rs960 billion from the petroleum levy.

Petroleum productsUnitMinimum petroleum levy rate (in rupees per unit)Maximum petroleum levy rate (in rupees per unit)
1High speed diesel oil (HSDO)Liter6080
2Motor gasolineLiter6080
3Superior kerosene oil (SKO)Liter5050
4Light Diesel Oil (LDO)Liter5075
5High octane blending component (HOBC)Liter5075
6E-10 gasolineLiter5075
7Liquefied petroleum gas (produced/extracted in Pakistan)Metric ton3000030000

You can read the complete details of the budget here.

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