Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb has announced key relief measures in the federal budget for 2025-26, including a significant reduction in income tax for the salaried class and a cut in general sales tax (GST) on imported solar panels, reported 24NewsHD TV channel.
Winding up debate on the finance bill 2025-26 in the Senate on Saturday, Senator Aurangzeb further said that individuals earning between Rs600,000 and Rs1.2 million annually will now be taxed at just 1%, down from 2.5% proposed in the federal budget for FY2025-26.
Aurangzeb expressed the government’s firm commitment to take the country towards inclusive and sustainable economic growth, saying the government exercised fiscal discipline, checked inflation, enhanced foreign exchange reserves and brought improvement in the current account in the outgoing fiscal year.
The finance minister said the budget 2025-26 encompasses measures for the public welfare while maintaining fiscal discipline. He mentioned the federal expenditures have been envisaged to increase by 1.9 percent in the next fiscal year as compared to 10 or 12 percent in previous years.
On the directions of the Prime Minister Shehbaz Sharif, the minister said that income tax rate for those earning between 600,000 rupees and 1.2 million rupees has been reduced from 2.5 percent to one percent. He said salaries have been enhanced by 10 percent and pensions of retired employees by seven percent in the budget.
Aurangzeb said it has also been decided after consultations to reduce sales tax on solar panels to 10 percent from 18 percent. He said the budget of Benazir Income Support Programme has been enhanced to 716 billion rupees from 592 billion rupees.
The minister was appreciative of the Senate Standing Committee on Finance and Revenue’s recommendations on finance bill 2025-26, assuring that about 50 percent of these will be made part of the budget.
Speaking in the Upper House, Aurangzeb said low- and middle-income individuals play a vital role in our economy. “This is the segment that endures inflation and pays taxes,” he acknowledged, saying the proposal to reduce income tax on this salaried class was already part of the budget suggestions.
The minister was of the view that the implementation of a 1% income tax rate is both “a practical and symbolic recognition” by the government that it does not want to burden this class. “We hope this step will not only increase compliance but also restore their confidence in the tax system,” he added.
Aurangzeb reiterated the government did not introduce a mini-budget during the outgoing fiscal year and maintained fiscal discipline. He said the federal government expenditure for FY26 has increased marginally by 1.9%, far lower than in previous years.
Aurangzeb further said the proposed 18% GST on solar panel imports has been slashed to 10 percent following consultations with lawmakers. “The government in its budget proposed to impose an 18% GST on imported solar panels. This was done to protect local industries and provide a level-playing field, and promote the development and investment in solar technology in Pakistan,” he said.
However, in light of detailed deliberations on the budget in both houses, the government has decided to reduce the proposed tax to 10%. Moreover, this tax will apply only to 46% of imported components, said Aurangzeb and added “With this measure, the price of solar panels will increase by 4.6%.”
Aurangzeb informed the house that the government has received reports of profiteering and hoarding of solar panels by certain elements. “It is condemnable that these opportunistic actors have artificially increased prices even before the proposed measure has come into effect. I strongly warn such elements that the government will take every possible step in the public interest,” he said and added legal action will be taken against those involved.
The Senate session was convened with Deputy Chairman Sardar Syedal Khan Nasar presiding. The Upper House concluded its budget debate following seven sittings.
The deliberations centred on a motion moved by Finance Minister Aurangzeb, on June 10, seeking the Senate’s recommendations on the Finance Bill—comprising the Annual Budget Statement—under Article 73 of the Constitution.
Later, the Senate session was prorogued sine die following the adoption of key budget recommendations for onward submission to the National Assembly.
Deputy Chairman Senate Syedaal Khan Nasar read out the presidential order, officially proroguing the session indefinitely.
The House adopted the Senate committee’s recommendations on the Federal Budget 2025–26, following the conclusion of the general debate by Finance Minister Aurangzeb.
NA body okays relief for salaried class, non-filers
Earlier in the day, the National Assembly’s (NA) Standing Committee on Finance, which met with Syed Naveed Qamar in the chair on Saturday, approved several proposals to provide relief to the salaried class as well as non-filers.
The committee approved the suggestion to reduce the tax levied on those, drawing between Rs600,000 and Rs1200,000 in salary annually, from 2.5 per cent to one per cent.
The NA body also approved the proposal to increase the limit of the amount non-filers could draw from the bank, from Rs50,000 to Rs75,000.
Similarly, the suggestion to increase the tax from 0.6 per cent to 0.8 per cent on those drawing Rs75,000 from banks every day was also approved.
Likewise, the committee also okayed the proposal to slash the super tax on the corporate sector by 0.5 per cent.
A proposal was also okayed to abolish the tax exemption granted to those depositing their amounts in the Special Convertible Rupee Accounts (SCRA) accounts for less than six months.
The State Bank of Pakistan (SBP) officials said after the meeting that a proposal was also approved to abolish the tax exemption granted to foreign investors for depositing cash in special accounts for a period less than one year.
However, if foreign investors would deposit the amounts for one year, then they would be able to avail the tax exemption, informed the SBP officials.
The officials asked foreign investors to keep their cash in special accounts for at least one year because when they kept it for a limited time period, it did not benefit the government.
Similarly, the suggestion to levy two per cent withholding tax on cash on delivery was also okayed.
A proposal was also approved to levy tax on e-commerce besides obtaining the data of individuals doing banking transactions beyond their income.
The Federal Board of Revenue (FBR) chairman said that a proposal was also approved to issue a Red Flag for those doing high transactions in current accounts.
Likewise, the suggestion to deploy FBR officials at the premises of an industrial unit, or any other business was also okayed.
The committee rejected the proposal to fine those selling items to non-registered customers online.
Reporters Usman Khan and Waqas Azeem