Pakistan Passes Finance Bill 2025 with Significant Amendments and Tax Reforms

Strategic Insights -

The National Assembly of Pakistan has approved the Finance Bill 2025, incorporating crucial amendments to the federal budget for the fiscal year 2025-26. The bill, moved by Minister for Finance and Revenue, Senator Muhammad Aurangzeb, aims to enhance exports, improve foreign exchange reserves, and reduce fiscal imbalances. The budget outlines a comprehensive fiscal plan, projecting an economic growth rate of 4.2% and an inflation rate of 7.5%. The total outlay for the federal budget is Rs 17.573 trillion, with a revenue collection target of Rs 14,131 billion, an increase of 18.7% compared to the previous fiscal year.

Key Takeaways:

  • The Finance Bill 2025 was passed with a majority vote, incorporating specific amendments and tax reforms.
  • The total outlay of the federal budget for the fiscal year 2025-26 is Rs 17.573 trillion.
  • The budget aims to enhance exports, improve foreign exchange reserves, reduce fiscal imbalances, and encourage economic productivity.
  • The revenue collection target by Federal Board of Revenue (FBR) has been set at Rs 14,131 billion, showing an increase of 18.7% compared to fiscal year 2024-25.
  • The budget raised salaries of employees from Grade 1-22 by 10 percent and enhanced pension of retired employees by 7 percent.
  • The government reduced income tax rate for those earning between Rs 0.6 million and Rs1.2 million annually to just 1 percent.
  • The digital sales tax on services would remain within the jurisdiction of provinces, while the GST tax on solar panels would be charged at 10%.
  • Tax will not be imposed on pension commutation or gratuity, but those receiving pensions above Rs 10 million would be taxed.

Statistics:

  • Total outlay of the federal budget for the fiscal year 2025-26: Rs 17.573 trillion.
  • Revenue collection target by Federal Board of Revenue (FBR): Rs 14,131 billion.
  • Increase in revenue collection target: 18.7% compared to fiscal year 2024-25.
  • Economic growth rate projected for the fiscal year 2025-26: 4.2%.
  • Inflation rate expected for the fiscal year 2025-26: 7.5%.
  • Primary surplus projected to reach 2.4% of GDP.
  • Fiscal deficit estimated at 3.9% of GDP.
  • Increase in allocated amount for Benazir Income Support Programme (BISP): 21% to Rs 716 billion.
  • Number of beneficiary families under BISP to be increased to 10 million.

Sources:

  • "Finance Bill 2025 passed with majority vote," Dawn News, July 1, 2025.
  • "Budget 2025-26: A Balanced Plan for Sustainable Growth," Pakistan Today, June 30, 2025.
  • "Federal Budget 2025-26: Key Takeaways," The Express Tribune, June 29, 2025.