‘War-like situation’ with India: Tax firm proposes Rs2.8tn defence budget for FY26

(Web Desk): Tola Associates, a tax advisory and consultancy firm in Pakistan, has proposed to raise the defence budget to Rs2.8 trillion for the fiscal year 2025-26, reflecting a 32pc increase as compared to the last fiscal.

The firm cites a “war-like situation” with neighbouring India behind an increase in the defnece budget. The tax advisory firm gave the proposal in its report ‘Budget 2025-26 a rare catalyst for course correction’, released on Saturday.

“The budgeted defence expenditure stood at Rs2,122 billion for FY25 while the actual expenditure till March 2025 was Rs1,424 billion. [However], due to the ongoing war situation with the neighbouring country, defence spending may increase by up to 50pc in the Q4FY25,” read the report.

The firms noted that in the previous three years, defence expenditure in the last quarter accounted for 36pc of the annual total defence expenditure made throughout the fiscal year.

“Given the current regional tensions and the need to ensure Pakistan’s defence preparedness, we estimate total defense spending to reach Rs2.4 trillion by June 2025.”

Moreover, the firm also proposed to enhance the defence budget to Rs2.8 trillion in FY26, reflecting a 32pc increase when compared with the outgoing FY’s budget, “due to the war situation with the neighbouring country and the new recruitment of army personnel”.