ISLAMABAD: Finance Minister Muhammad Aurangzeb on Monday unveiled additional budget proposals in the National Assembly, introducing new taxation measures and announcing economic initiatives aimed at broadening the tax base and promoting compliance.
Aurangzeb proposed an increase in the tax rate on income derived from the debt portion of mutual funds issued to companies, raising it from 25 percent to 29 percent.
He also announced a 20 percent tax on profits made by corporations and companies from investments in government securities. A Federal Excise Duty of Rs10 per day-old chick was also proposed on hatchery chicks as part of efforts to tax the poultry sector.
The finance minister said the government has presented a balanced budget for fiscal year 2025-26, controlling expenditure while focusing on increasing tax revenue. He added that tariff rationalisation was essential to reduce business costs and support exports.
An industrial policy will be announced soon, and consultations on an electric vehicle policy are already underway, he said.
Aurangzeb also said that the government, in partnership with the British Asian Trust, will soon launch Pakistan’s first Skill Impact Bond, a results-based financing initiative linking funding to outcomes. To promote affordable housing, a 20-year loan scheme for low-income individuals will be introduced.
The finance minister reiterated that only those dams already approved will be pursued. He confirmed tax relief for salaried individuals earning between Rs600,000 and Rs1.2 million annually, reducing their tax rate to 1 percent from the earlier proposed 2.5 percent.
He added that individuals receiving an annual pension exceeding Rs10 million will be taxed, while pensioners above 75 years will remain exempt from all taxes.
Aurangzeb also confirmed that the proposed 18 percent General Sales Tax on imported solar panels has been reduced to 10 percent.
Addressing concerns about the Federal Board of Revenue’s powers under the Finance Bill, Aurangzeb said that on the Prime Minister’s instructions, the provisions for tax fraud have been revised. Tax fraud is now categorised into cognizable and non-cognizable offences.
In cases involving up to Rs50 million, the FBR will require a court warrant to arrest any individual. Arrests can only proceed if the accused fails to respond to three notices, attempts to flee, or tampers with records.
Furthermore, arrests must be approved by a high-level FBR committee and the accused must be presented before a special judge within 24 hours. Aurangzeb said no citizen would be mistreated under this process.
In the real estate sector, the finance minister explained that Section 114C of the Income Tax Ordinance aims to restrict large transactions by individuals whose declared financial means do not justify such purchases. However, the new law will not apply to residential properties worth up to Rs50 million, commercial properties worth up to Rs100 million, or vehicles priced up to Rs7 million.
Aurangzeb concluded by acknowledging that ongoing tensions between Iran and Israel may affect the region’s economy, but assured the house that the government is prepared to respond to any potential economic disruption.
