National Assembly passes Rs17.57tr budget for FY2025-26

ISLAMABAD: The National Assembly on Thursday passed the Rs17.57 trillion federal budget for the fiscal year 2025-26, formally approving the Finance Bill amid opposition protest and heated debates throughout the session.

The budget smoothly sailed through the Lower House of the Parliament by majority while all the opposition motions were rejected by majority vote.

Following the passage of the budget, the assembly session was adjourned until 11am on Friday.

During the session, chaired by Speaker Ayaz Sadiq, the motion to approve the Finance Bill was passed by a majority vote, after which the process of clause-wise approval of the bill began. 

The opposition tabled an amendment for postponing the approval of the Finance Bill, but it was rejected by a majority vote.

Climate Change Levy

Finance Minister Muhammad Aurangzeb introduced an amendment to replace the proposed carbon levy with a “climate change levy”. During the debate on Clause 3 of the bill, the opposition presented six amendments, all of which were rejected by the House. 

Clause 4 of the Finance Bill, which included several proposed amendments by the federal government to the Customs Act 1969, was passed by a majority vote. A total of 201 members voted in favour, while 57 opposed the changes. All amendments introduced by the opposition under this clause were also rejected by the House. 

Revised salaries of lawmakers

The government also tabled a new amendment related to the salaries of parliamentarians. An amendment presented by Syeda Nosheen Iftikhar, which seeks to revise the pay structure of members of parliament, was approved with majority support.  

Under the approved changes, an increase in the salaries of parliamentarians, federal ministers, and ministers of state has now been formally included in the Finance Bill 2025. 

Another key amendment, introduced by Finance Minister Muhammad Aurangzeb, sought to ensure that federal ministers and ministers of state receive salaries equal to those of regular members of parliament. This amendment to the Salaries and Allowances Act, 1975, was also passed by majority vote. 

FBR’s power to arrest tax evaders

Additionally, the NA approved the amendment about granting FBR the power to arrest individuals involved in serious sales tax fraud.

According to the amendment, arrest can be made in cases involving forgery, manipulation, or the issuance of fake tax invoices without the actual supply of goods. Tampering with sales tax data or misrepresenting information in tax returns will now legally be considered sales tax fraud.

The bill also includes strict provisions for those who attempt to destroy evidence or deliberately file false tax declarations. However, it clarifies that individuals cooperating with the investigation will not be arrested, and any inquiry related to tax fraud will no longer be treated as confidential.

To safeguard against misuse, the bill stipulates that arrests can only occur in cases involving fraud worth Rs50 million or more. Additionally, approval for arrests must be obtained from a committee comprising the FBR’s Member Operations and Member Legal.

In case of arrest, the accused must be produced before a magistrate within 24 hours.

The bill also permits arrest if the accused attempts to flee the country or destroy key evidence related to the fraud.

Tax on salaried class

The House approved the Income Tax Ordinance related to tax on the salaried class, rejecting the opposition’s motions by a majority vote.

According to the ordinance, individuals drawing up to Rs0.6 million per annum salary were exempted from tax, while people drawing a salary between Rs0.6  million and Rs1.2 million will have to pay one per cent tax.

In the second slab, one per cent income tax will be imposed on the salaried class on amounts above R0.6 million while those earning an annual salary between Rs1.2 million and Rs2.2 million will have to pay a fixed tax of Rs 6,000 as well as 11 per cent income tax.

In the third slab, 11 per cent income tax will be imposed on the salaried class on amounts above Rs1.2 million. There will be a fixed tax of Rs116,000 and a 23 per cent income tax on people getting annual salaries between Rs2.2 million and Rs3.2 million.

In the fourth slab, 23 per cent income tax will be imposed on the salaried class on amounts exceeding Rs2.2 million, while the class drawing annual salaries between Rs3.2 million and Rs4.1 million will have to pay a fixed tax of Rs346,000 and 30 per cent income tax.

In the fifth slab, 30 per cent income tax will be imposed on the salaried class on amounts exceeding Rs3.2 million. Those earning an annual salary above Rs4.1 million will have to pay Rs616,000 fixed tax and 35 per cent income tax.

In the sixth slab, 35 per cent income tax will be imposed on the salaried class on amounts exceeding Rs4.1 million.

Moreover, income tax will be imposed on pensions exceeding Rs10 million per year. This class is exempted from the fixed tax but those receiving more than Rs10 million pension annually will have to pay a five percent tax.

PPP backs budget as govt meets our key demands: Bilawal

Pakistan Peoples Party (PPP) Chairman Bilawal Bhutto-Zardari announced on the assembly floor his party’s fully support to the budget, stating that the government has accepted all of their major demands, including a significant increase in the Benazir Income Support Programme (BISP) and tax relief on solar panels.

Bilawal said the PPP had approved the government’s budget proposals because Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb addressed their concerns.

“We thank the government for agreeing to raise BISP funding by 20 per cent — the highest-ever increase — and accepting our recommendation to exempt annual salaries of up to Rs1.2 million from tax.”

He criticised the previous Pakistan Tehreek-e-Insaf (PTI) government for cutting BISP allocations, calling it a “deliberate move to undermine a vital poverty alleviation programme.”

Bilawal also highlighted that the government had agreed to halve the proposed tax on solar panels, which PPP had strongly opposed.

On tax enforcement, the PPP chairman noted that the FBR would no longer have the power to arrest taxpayers in the initial stages of investigation. He said the arrest provision had been made bailable and softened following the party’s protest.

“We appreciate the government’s willingness to listen,” he said. “Thanks to our dialogue, the budget is now more people-friendly, and we can support it wholeheartedly.”

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