Only salaried class likely to get some tax relief in budget 2025–26

ISLAMABAD: Pakistan’s upcoming federal budget for 2025–26 will be austere, with limited scope for tax concessions, the Federal Board of Revenue (FBR) said on Wednesday.

The only expected relief is for salaried individuals, while broader sales tax cuts — including those requested by industries like dairy — are off the table due to the constraints of the International Monetary Fund (IMF) programme.

Speaking at a meeting of the National Assembly’s Standing Committee on Finance and Revenue, FBR Chairman Rashid Mahmood confirmed that economic pressures and a revised set of macroeconomic assumptions — including GDP growth, import levels, inflation, and large-scale manufacturing output — have made the fiscal space tighter. “We’re in a difficult position when it comes to revenue collection,” he said.

Mahmood stated that while the FBR is analysing sectoral proposals, including a demand to cut sales tax on dairy products from 18 to 5 per cent, no major exemptions are being considered in light of IMF commitments.

Finance Minister Muhammad Aurangzeb, who joined the session online from Karachi, confirmed that tax relief for salaried workers is being seriously considered. Insiders say the FBR has already worked out several proposals in this regard.

The meeting, chaired by Syed Naveed Qamar, also discussed the need to shield essential goods like milk from high taxes. Qamar urged the FBR to negotiate with the IMF to allow sector-specific relief while making up any shortfall from other revenue sources.

Meanwhile, the committee reviewed several legislative matters. It recommended passage of “The Income Tax (Amendment) Bill, 2024” and supported further consultation on the “Corporate Social Responsibility Bill, 2025,” which was referred to a newly formed sub-committee for detailed review.

Concerns were raised about non-compliance with minimum wage laws within government departments. Agha Rafiullah, MNA, said several entities continue to pay below the legal threshold. The committee directed the finance ministry to ensure enforcement and deferred the issue for further discussion.

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