Pakistan Announces Fresh Tax Measures in Budget Speech

Strategic Insights -

Finance Minister Muhammad Aurangzeb introduced fresh tax measures in the National Assembly during the budget speech for FY2025-26, aiming to increase revenue and promote economic stability. The measures include a 29% tax on income from the debt portion of mutual funds for companies and a 20% tax on profits earned by corporations through government securities. Additionally, the poultry sector will face a Rs10 Federal Excise Duty on each day-old chick. The government also announced tax relief for the salaried class and changes in pension tax rules.

Key Takeaways:

  • A 29% tax will be imposed on income from the debt portion of mutual funds for companies.
  • A 20% tax will be levied on profits earned by corporations through government securities.
  • The poultry sector will face a Rs10 Federal Excise Duty on each day-old chick.
  • People earning between Rs600,000 and Rs1.2 million annually will now pay just 1% tax.
  • Pensioners earning over Rs10 million will be taxed, but those above 75 years old will remain tax-exempt.
  • The General Sales Tax on imported solar panels has been reduced from 18% to 10% to promote clean energy use.
  • Changes in tax rules aim to improve compliance and control FBR powers.
  • Offences involving up to Rs50 million will now need a court warrant for arrests.
  • A three-member FBR committee must approve arrests, which must be reported to a special judge within 24 hours.
  • A new law under Section 114C targets financial transactions beyond declared income.
  • Exemptions apply for residential plots under Rs50 million and commercial properties under Rs100 million.
  • Vehicles costing up to Rs7 million are exempt from the new law.

Statistics:

  • A 29% tax on income from the debt portion of mutual funds for companies will be adopted.
  • A 20% tax on profits earned by corporations through government securities will be levied.
  • The poultry sector will face a Rs10 Federal Excise Duty on each day-old chick.
  • People earning between Rs600,000 and Rs1.2 million annually will now pay just 1% tax.
  • Pensioners earning over Rs10 million will be taxed, with 75-year-olds remaining exempt.
  • The General Sales Tax on imported solar panels has been reduced from 18% to 10%.

Sources:

  • Dawn News "Government announces fresh tax measures in budget speech"
  • The Express Tribune "Pakistan introduces fresh tax measures in budget speech"
  • Islamabad News Agency "Finance Minister Muhammad Aurangzeb's Budget Speech"