Punjab unveils 5.3 trillion tax-free budget for FY 2025-26

Lahore (Web Desk): Punjab’s Finance Minister Mian Mujtaba Shuja-ur-Rehman  on Monday presented the provincial budget for the financial year 2025–26 with a total outlay of Rs5,335 billion.

This comprehensive fiscal roadmap includes a substantial allocation of Rs1,240 billion for development programmes, which represents 23% of the total budget and marks a 47% increase compared to the Rs842 billion earmarked for development in the current fiscal year 2024–25.

Presenting the budget at the Punjab Assembly amid ruckus by the opposition members, the finance minister highlighted the government’s strong focus on accelerating development while maintaining fiscal responsibility.

One of the notable cost-saving measures is the significant reduction in estimated expenditures under Account-II (Food), which have been cut by 88% to Rs53.3 billion compared to the ongoing year. 
According to the minister, this decrease is a reflection of improved economic management and has contributed to a 94 percent reduction in internal debt servicing liabilities.

Mian Mujtaba emphasized the government’s ongoing prioritization of health, education, and the broader social sector. In line with this commitment, Rs494 billion—equivalent to 40% of the Annual Development Programme (ADP)—has been allocated to these critical areas. This spending is intended to enhance service delivery, uplift human development indices, and improve overall social outcomes across the province.

Providing a detailed breakdown of expected revenues, the minister stated that the total revenue target for the upcoming fiscal year is Rs4,890.4 billion. Of this, Punjab is projected to receive Rs4,062.2 billion through the National Finance Commission (NFC) award from the federal government, while provincial own-source revenues are estimated at Rs828.2 billion.

Within the province’s revenue collection apparatus, the Punjab Revenue Authority (PRA) has been assigned a target of Rs340 billion, the Board of Revenue Rs135.5 billion, and the Excise and Taxation Department Rs70 billion.

Describing the 2025–26 budget as tax-free, progressive, and business-friendly, the finance minister announced that Rs2,706.5 billion will be spent on salaries and pensions for provincial employees, Provincial Finance Commission (PFC) transfers to local governments, and core public service delivery.

This figure reflects a six percent reduction compared to the previous year’s expenditure in these areas. Additionally, Rs590.2 billion has been allocated under the category of Current Capital Expenditures.

To strengthen local governance, the government has allocated Rs764.2 billion through the Provincial Finance Commission (PFC) Award to empower local bodies across Punjab. Special grants have also been included, with Rs150 billion set aside for waste management services and Rs20 billion allocated to support municipal corporations.

Furthering the vision of a welfare-oriented state, and aligning with the principles of Quaid-i-Azam Muhammad Ali Jinnah, the Punjab government has introduced a Rs70 billion social protection package aimed at safeguarding vulnerable segments of society. This includes targeted subsidies, support programmes, and poverty alleviation measures.

The minister also stated that in keeping with agreed-upon national fiscal parameters, Rs470 billion in provincial surplus has been built into the budget under the Extended Fund Facility (EFF) framework agreed between the federal government and the International Monetary Fund (IMF).

However, he clarified that the realization of this surplus is conditional on the Federal Board of Revenue (FBR) achieving its projected revenue targets, which would ensure that fiscal coordination between federal and provincial governments remains on track.

The finance minister concluded by asserting that the 2025–26 budget lays a solid foundation for inclusive development, prudent financial governance, and social equity, positioning Punjab for stable economic growth in the year ahead.