ISLAMABAD, Jun 23 (Alliance News): Federal Finance Minister Senator Muhammad Aurangzeb on Monday described the fiscal year 2025–26 budget as a balanced plan aimed at public relief, industrial promotion, curbing government spending, boosting revenue, and enforcing fair taxation to ensure sustainable and export-led growth.
While concluding the general debate in the National Assembly, the minister said several tax adjustments and relief measures were incorporated in the budget following recommendations from parliamentary finance committees.
He reaffirmed the government’s commitment to economic stability amid regional tensions.
Aurangzeb announced significant relief for the salaried class, reducing income tax for individuals earning up to Rs3.2 million annually.
Those earning between Rs0.6 million and Rs1.2 million will now pay just 1% income tax, down from a proposed 2.5%. He also clarified that pension commutation and gratuity remain untaxed, except for pensions exceeding Rs10 million, while citizens over 75 are fully exempt.
On the solar energy front, the previously proposed 18% sales tax on solar panel components has been reduced to 10%, affecting only 46% of imported parts. This adjustment will raise panel prices by only 4.6%, he said.
Condemning opportunistic hoarding and artificial price hikes by market players, the minister warned of legal action in collaboration with provinces to counter such exploitation.
He also announced new legal safeguards to prevent misuse of arrest powers by the Federal Board of Revenue (FBR).
Under new rules, the FBR cannot arrest anyone for evasion involving Rs50 million or more without a court warrant and specific conditions, including deliberate evasion after three notices or prosecution referral, with approvals from a three-member FBR committee.
Following Prime Minister Shehbaz Sharif’s directives, restrictions on asset purchases by undocumented individuals have been relaxed. These will not apply to residential property up to Rs50 million, commercial assets up to Rs100 million, or vehicles worth up to Rs7 million.
Aurangzeb clarified that capital gains tax will not apply to property sold after six years of purchase, if acquired before July 1, 2024.
However, a 4.5%–6% withholding tax will be levied on purchases—refundable upon filing tax returns. Properties in personal use for over 15 years will be exempt from this tax.
To support local agriculture, sales tax will now apply to imported raw cotton and yarn, narrowing the price gap between imported and local products. This measure, he said, will protect domestic farmers while continuing support for export sectors.
Income tax reforms include raising tax on inter-corporate dividends from mutual funds from 25% to 29%, and increasing tax on company investments in government securities to 20%.
The minister also proposed a Rs10 tax on each broiler chick, citing the poultry sector’s low tax contribution. E-commerce taxes have been rationalized to support the sector’s growth.
In response to potential regional fallout from the Iran-Israel conflict, Aurangzeb confirmed that a high-level committee formed on June 14 is assessing the impact on Pakistan’s economy.
He stressed the importance of documentation, which will improve tax compliance, enhance exports, and reduce informality. The budget, he said, promotes industry, construction, and environmental protection.
The Benazir Income Support Programme’s (BISP) budget has been increased from Rs592 billion to Rs716 billion to assist over 10 million low-income families. The government also announced a skills initiative in partnership with the British Asian Trust to prepare youth for employment.
For small farmers, the government will launch a collateral-free loan programme of up to Rs1 million for those owning up to 12.5 acres.
The loans will cover key inputs, and health and crop insurance will be included. An electronic warehouse receipt system will also be introduced to help farmers store produce and access better market rates.
Other key initiatives include a 20-year housing loan scheme for low-income groups, ongoing work on an Electric Vehicle policy, and support for 193,000 women under the Women Inclusive Finance Programme, which will expand further with Asian Development Bank backing.
Aurangzeb concluded by affirming the government’s commitment to phased development, sustainable growth, and economic revival.
