Pakistan Approves Rs17.57 Trillion Federal Budget with Tax Reforms and Government Spending Plans

The National Assembly on Thursday approved the Rs17.57 trillion federal budget for the fiscal year 2025-26, with certain amendments, rejecting opposition calls for public consultation. The budget features a raft of tax reforms, revenue measures, and government spending plans for the coming year. Finance Minister Mohammad Aurangzeb moved the Finance Bill 2025, which was taken up for a clause-by-clause review, with opposition amendments being overwhelmingly rejected. The bill introduces measures for arresting individuals involved in tax fraud, including penalties for issuing invoices without the delivery of goods or tampering with tax records. The Finance Minister also presented an amendment to the Income Tax Ordinance 2001, granting tax exemptions to 107 institutions, including charitable and educational organizations.

Key Takeaways:

• The Rs17.57 trillion federal budget for the fiscal year 2025-26 was approved with certain amendments, rejecting opposition calls for public consultation.
• The bill introduces measures for arresting individuals involved in tax fraud, including penalties for issuing invoices without the delivery of goods or tampering with tax records.
• Tax exemptions were granted to 107 institutions, including charitable and educational organizations, under the Income Tax Ordinance 2001.
• A carbon levy of Rs2.50 per liter on petroleum products was approved under clause 3.
• A 10% sales tax on solar panels was imposed to promote sustainable energy while generating government revenue.
• Income tax relief has been extended to pensions of former presidents and their widows, as well as to the Supreme Court's Diamer-Bhasha and Mohmand Dam Fund.
• The Customs Act of 1969 was amended to enhance anti-smuggling efforts, with penalties introduced for not using the electronic bill (e-bill) system for the domestic movement of goods.
• Employees earning up to Rs600,000 annually were exempted from tax, while new tax slabs were introduced for higher income groups.
• Federal ministers and ministers of state would now receive the same salary as Members of Parliament.

Statistics:

• Rs17.57 trillion: total federal budget for the fiscal year 2025-26
• Rs1.2 million: annual income exempt from income tax
• Rs600,000: annual income exempt from tax for salaried individuals
• 10%: sales tax on solar panels to promote sustainable energy
• Rs2.50: carbon levy per liter on petroleum products
• 107: number of institutions granted tax exemptions under the Income Tax Ordinance 2001

Sources:

• Pakistan Daily Dawn
• The Nation
• Geo News