ISLAMABAD:
The federal government on Sunday proposed a mini-budget worth Rs36 billion just four days before the expected passage of the FY2025-26 budget, taking total new tax measures to Rs462 billion.
The new taxes aim to offset revenue losses due to a cut in sales tax on solar panel imports (from 18% to 10%) and to fund a 10% salary hike for government employees, up from the originally planned 6%.
Key Tax Changes
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Rs10 excise duty imposed on one-day-old chicks
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29% income tax on dividends to companies from debt-heavy mutual funds
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20% withholding tax on profit from government securities for institutional investors
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New slab-based rules to limit large economic transactions by tax non-filers, with exceptions:
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Car purchases up to Rs7m allowed
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Residential properties under Rs50m exempt
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Commercial plots up to Rs100m excluded
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Bank deposits up to Rs100m/year not restricted
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Stock investments under Rs50m/year permitted
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The revisions come amid public backlash to earlier blanket restrictions on high-value purchases by individuals with undeclared income. Officials say the new thresholds are calibrated based on the assumption that only Pakistan’s top 5% evade taxes.
Committee Approvals and IMF Input
The National Assembly Standing Committee on Finance approved the Rs36b tax package, which was presented by FBR Chairman Rashid Langrial. Finance Minister Muhammad Aurangzeb, Minister of State Bilal Kayani, and PPP’s Naveed Qamar led the session.
The International Monetary Fund (IMF) has already approved three out of six proposed tax measures.
The FBR’s tax target for FY2025-26 now stands at Rs14.13 trillion.
Cotton, Mutual Fund, and REIT Revisions
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Uniform 10% sales tax on imported and local cotton introduced
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REITs to remain at 15% tax
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Mutual funds taxed based on proportional investments:
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25% for mixed portfolios
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29% if income mainly from profit on debt
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The Finance Bill 2025-26 was passed by the committee with amendments from both Senate and National Assembly panels.
