Armed forces officers to receive 50% allowance, JCOs and soldiers 20%, Finance ministry tells NA panel

Testifying before the National Assembly’s Standing Committee on Finance and Revenue, Secretary of Finance Imdadullah Bosal informed a parliamentary panel that a special relief allowance would be granted to armed forces personnel for the upcoming fiscal year. Officers will receive 50% of their basic salary, while junior commissioned officers (JCOs) and soldiers will receive 20%. 

According to a news report, this measure was announced as part of the fiscal year 2025-26 budget proposals. However, the finance ministry did not disclose the financial impact and the reason for the higher allowance for officers. 

Bosal said that the government had approved these allowances as part of the relief measures, though it did not provide an explanation for the higher allowance granted to officers. 

Earlier, Finance Minister Muhammad Aurangzeb promised to provide a detailed response on the matter following questions raised by opposition members, particularly Opposition Leader Omar Ayub, who had sought clarity on the financial impact of these allowances.

The special relief allowances are part of broader budgetary changes as the government revises its public sector development program (PSDP). This year’s PSDP has been revised to Rs967 billion, down from an initial target of Rs1.1 trillion, with only Rs662 billion spent so far. 

The ministry acknowledged that even the revised amount might not be fully utilised by June 30, raising concerns about the potential impact on economic growth projections, which were based on the higher investment figure.

In addition to the armed forces allowance, the committee discussed several aspects of the budget, including a Rs1 trillion target for provincial surpluses. 

The federal government expects to secure approximately $1 billion in foreign inflows before the close of the fiscal year through syndicated bank arrangements, with an additional $500 million guaranteed by the Asian Development Bank. This is expected to raise the country’s foreign exchange reserves to $14 billion by June-end.

The Finance Secretary also provided updates on other key areas of revenue. The petroleum levy on diesel and petrol will rise by Rs2.5 per liter, taking its average size to Rs80 per liter. The government has also removed the upper cap on the petroleum development levy to fund power sector subsidies and infrastructure projects. 

This measure is expected to generate Rs1.468 trillion next year, up from Rs1.161 trillion in the current fiscal year.

The committee members also expressed concerns about issues such as the tax-to-GDP ratio, revenue shortfall, taxes on solar panels and hybrid vehicles, the carbon levy, and the challenges of climate change. Additionally, they raised concerns about smuggling at the borders and inefficiency in Customs Intelligence.