Budget Day: PSX Soars 2,696 Points on Relief Package — June 2026
Pakistan's Budget 2026-27, presented on June 12, triggers a 2,696-point rally on the KSE-100 as investors cheer income tax cuts for salaried class, super tax relief for businesses, and a record Rs. 18.77 trillion outlay.
Budget 2026-27: Markets Celebrate as Tax Relief Dominates
Key Takeaways
- KSE-100 gained 2,696 points (+1.59%) on Budget Day (June 12) — closing at ~172,399
- Pakistan’s total federal budget set at Rs. 18.77 trillion — 6.8% larger than last year
- Salaried class gets major income tax relief — rates cut by 3–6 percentage points across slabs
- Super tax abolished for companies earning under Rs. 500 million annually
- Property taxes dramatically reduced: 236K to 1.5%, 236C to 2.75% (flat rates)
- IT export tax regime (0.25%) extended to June 2030 — major win for tech sector
Market Reaction: Biggest Single-Day Budget Rally in Recent Memory
The Pakistan Stock Exchange (PSX) reacted strongly to Budget 2026-27, with the KSE-100 Index gaining 2,696.84 points (+1.59%) to close at approximately 172,399 on June 12, 2026. Market capitalization rose by roughly Rs. 874 billion during budget week.
The rally was broad-based:
- Banks rose on lower super tax exposure
- Technology stocks surged on the IT export tax extension
- Real estate and construction gained on property tax relief
- Auto sector mixed — large-engine vehicles face new FED, EVs under Rs. 20M get zero duty
The Budget in Numbers
| Metric | FY 2025-26 | FY 2026-27 |
|---|---|---|
| Total Budget | Rs. 17.57 trillion | Rs. 18.77 trillion (+6.8%) |
| FBR Revenue Target | Rs. 14.13 trillion | Rs. 15.26 trillion (+8%) |
| GDP Growth Target | 3.2% (est.) | 4.0% |
| Inflation Target | — | 8.2% |
| Defence Allocation | Rs. 2,554B | Rs. 3,000B (+17.6%) |
| Debt Servicing | Rs. 8,207B | Rs. 8,054B (-1.86%) |
| BISP Allocation | Rs. 716B | Rs. 838B (+17%) |
| Min. Wage | Rs. 37,000/month | Rs. 40,700/month (+10%) |
Key Tax Changes Effective July 1, 2026
Salaried Class:
| Slab | Old Rate | New Rate |
|---|---|---|
| Rs. 600K–1.2M | 5% | 1% |
| Rs. 1.2M–2.2M | 15% | 11% |
| Rs. 2.2M–3.2M | 25% | 20% |
| Rs. 3.2M–4.1M | 30% | 25% |
| Rs. 4.1M–5.6M | 35% | 29% |
| Rs. 5.6M–7M | 35% | 32% |
| Above Rs. 7M | 35% | 35% |
Also abolished: the 9% surcharge on income above Rs. 10 million.
Businesses:
- Super tax abolished for companies with annual income up to Rs. 500 million
- Super tax reduced to 8% (from 10%) for income above Rs. 500 million
- Exporters: super tax completely abolished
Property:
- Section 236K (buyer WHT): flat 1.5%
- Section 236C (seller WHT): flat 2.75%
- Section 7E (deemed rental income on undeveloped plots): abolished
IT Sector:
- 0.25% final tax on IT export remittances extended to June 30, 2030
Budget Surprises vs Expectations
| Item | Market Expected | Actual |
|---|---|---|
| Tax-free slab | Rs. 600,000 | Rs. 600,000 (unchanged) |
| Rate cuts | 2–3 pp cuts | 3–6 pp cuts (exceeded expectations) |
| Super tax removal threshold | Rs. 300M | Rs. 500M (positive surprise) |
| Property tax | Modest cut | Major restructuring (positive surprise) |
| EV duty structure | Blanket zero | Tiered (some disappointment for luxury EVs) |
What You Should Do
- Recalculate your salary take-home using the Salary Slip Generator — new slabs effective July 1
- Check property buying/selling plans — the new 1.5%/2.75% rates start July 1; deals in progress may want to time transfers accordingly
- Freelancers and IT pros — confirm your PSEB/FBR registration to access the 0.25% rate through 2030
For the full budget breakdown with all sectoral changes, see our Pakistan Budget 2026-27: Complete Breakdown.
Frequently Asked Questions
When do Budget 2026-27 changes take effect?
Most changes are effective July 1, 2026 (start of FY 2026-27). Some measures (like petrol price cuts) are announced and implemented immediately.
Will my employer automatically update my salary tax from July 1?
Yes. Employers are required to adjust payroll withholding tax under the new slabs from the start of FY 2026-27. If your employer has not done so by July 2026 salary, raise it with HR.
How much tax do I save under the new slabs?
A salaried employee earning Rs. 1.8M/year saves approximately Rs. 28,000 annually. At Rs. 3M/year, the saving is over Rs. 80,000. Use our Tax Calculator for your specific figure.
All budget figures based on Finance Bill 2026 as presented June 12, 2026. Effective from July 1, 2026. Not financial advice.
HisaabKar Editorial
M.Phil Economics, B.Com · Pakistan Finance Specialist
Covering Pakistani economy, monetary policy, and financial markets for everyday readers.