Senate adopts 123 budget recommendations as National Assembly set to pass Finance Bill on June 23

The Senate on Thursday adopted 123 recommendations on the Finance Bill, 2026, including proposals for a 15% increase in salaries of government employees, restoration of frozen medical allowances, lower taxes on essential goods and agriculture inputs, and higher levies on luxury assets and large-engine vehicles.

The recommendations have been forwarded to the National Assembly, which is expected to approve the Finance Bill, 2026, on June 23. Regular and Technical Supplementary Grants for the financial years 2024-25 and 2025-26 are likely to be taken up on June 24, sources said.

According to reports, the government wants to complete approval of Budget 2026-27 before Muharram 9 and 10, which fall on June 25 and 26, respectively.

Senate adopts budget recommendations

The recommendations were adopted during a Senate session chaired by Chairman of Senate Yousaf Raza Gillani after the Senate Standing Committee on Finance and Revenue Chairman Saleem Mandviwalla presented the committee’s report on the Finance Bill.

Mandviwalla said the finance committee had submitted 108 recommendations, while the Senate Standing Committee on Planning had submitted 15 recommendations, bringing the total to 123.

He said this was the eighth consecutive budget for which he was presenting Senate recommendations as chairman of the finance committee.

Senate Chairman Gillani said the House had held detailed discussions on the budget for four consecutive days, with 56 senators taking part in the debate. He said the finance and planning committees had worked continuously to prepare the recommendations.

Following completion of the proceedings, the Senate session was adjourned for an indefinite period.

Salary, pension and tax relief proposals

Among its key proposals, the Senate recommended increasing the salaries of federal government employees by at least 15% and restoring frozen medical allowances for serving employees and pensioners.

The House also proposed reducing tax rates for salaried and low-income individuals to provide relief amid rising living costs.

The recommendations called for a reduction in General Sales Tax on food items, medicines, educational supplies and agricultural inputs.

The Senate also recommended withdrawing additional charges and taxes imposed through electricity bills on domestic and low-income consumers and allocating funds to reduce electricity tariffs.

Mandviwalla said relief had been provided to salaried individuals through reductions in income tax slabs, but called for further measures to reduce the burden on existing taxpayers.

Agriculture, IT and small business measures

The Senate proposed zero-rating taxes and duties on fertilisers, seeds, pesticides, diesel and agricultural machinery to support the agriculture sector.

It also recommended reducing taxes on fertilisers, seeds and agricultural machinery, along with reviewing proposed tax measures on essential commodities.

The House proposed extending tax exemptions available to IT exporters and freelancers for another 10 years.

Mandviwalla also called for additional measures to promote solar energy and proposed abolishing taxes on credit and ATM cards.

The Senate recommended simplifying the tax regime for small and medium-sized enterprises and broadening the overall tax base.

It also called for tax exemptions on books, notebooks and pencils.

Luxury assets, property and non-filers

To broaden revenue generation, the Senate recommended increasing taxes on vehicles with engine capacities above 3,000 cc, luxury properties and non-productive assets.

It also proposed documentation and taxation measures for luxury retail businesses, real estate transactions and luxury transactions by non-filers.

On property taxation, the Senate recommended that lower property tax rates should be available only to first-time homebuyers, while taxes should continue to apply to investors buying second homes or holding plots for investment purposes.

The recommendations also proposed reducing indirect taxes on essential goods and setting up a mechanism to transfer development funds to elected local governments.

In another recommendation, the Senate suggested allowing foreign residents and visitors to bring alcohol into the country for personal consumption.

Health, education and climate spending

The Senate recommended increasing allocations for public hospitals, primary healthcare services, higher education funds and scholarship programmes.

Mandviwalla said allocations for health and education remained very low and required attention.

He also said climate-related levies should be used only for environmental improvement measures.

Finance minister’s response

Winding up the budget debate, Finance Minister Senator Muhammad Aurangzeb assured the Senate that its recommendations would be considered for the federal budget.

He appreciated the Senate Standing Committee on Finance and Revenue for preparing the recommendations in a short period and said several key proposals would be made part of the Finance Bill, 2026, before it is placed before the National Assembly.

Aurangzeb said the government had not been able to achieve its GDP growth target due to global and regional economic conditions, including developments in the Middle East, but added that reform measures across sectors had continued.

He said the government had reduced taxes on the construction industry, abolished advance sales tax on the corporate sector and reduced the tax burden on the salaried class.

The finance minister said advance tax on the export sector had been abolished, various markup rates had been reduced and tax relief had been provided to the construction sector.

He said no new taxes had been imposed on the IT sector, while steps were being taken to create a better ecosystem and training opportunities for freelancers.

Aurangzeb said IT exports in the outgoing fiscal year were expected to reach $4.5 billion and that the government was providing coding training to youth associated with the sector.

He said the government had facilitated small farmers through easier access to loans, allocated Rs10 billion under the Youth Loan Scheme and abolished taxes on the import of agricultural machinery.

The minister said a simplified scheme was being introduced to bring small shopkeepers into the tax net. He added that the Federal Board of Revenue was being digitised to reduce human intervention and improve institutional efficiency.

Aurangzeb said the government was taking measures to move the economy towards self-reliance and had demonstrated its ability to deal with flood-related challenges through domestic resources.

National Assembly schedule

Sources said the budget debate in the National Assembly would continue until Saturday afternoon. Finance Minister Senator Muhammad Aurangzeb is expected to wind up the debate on Saturday evening, June 20.

During his winding-up speech, the finance minister will also present the Senate’s recommendations to the Lower House of Parliament.

He will present the Demands for Grants and Appropriations for 2026-27 on Sunday for discussion and voting on cut motions.

The finance minister will also present the Excess Budget Statements for the financial years 2016-17 and 2024-25, excluding charged expenditure, before the House.

In addition, the minister will present the Annual Budget Statement for 2026-27, including revised estimates for 2025-26.

Sources said discussion and voting on cut motions related to the demands for grants would continue on Sunday and Monday.

Opposition members are expected to move cut motions on various demands for grants. Sources said opposition parties, particularly the Pakistan Tehreek-e-Insaf and the Jamiat Ulema-e-Islam (F), were submitting cut motions to the legislative branch of the National Assembly Secretariat.

The Finance Bill, 2026, is expected to be presented for approval by the National Assembly on Tuesday, June 23, while the supplementary grants are expected to be tabled for passage on Wednesday, June 24.

Other Senate proceedings

The Senate also passed the Federal Board of Revenue (Amendment) Bill, 2026, which was presented by the finance minister.

The bill seeks to bring the FBR’s Policy Board under the Finance Division. It also proposes empowering the secretary Revenue Division to appoint and transfer FBR Members in grade 21 and above.