The federal government has announced significant tax relief measures in the Budget 2025-26, with special exemptions for senior citizens and major reforms aimed at easing the burden on the salaried class and improving the overall business environment.
Speaking in the National Assembly while concluding the budget debate, Finance Minister Muhammad Aurangzeb revealed that citizens aged 75 and above will now be fully exempted from income tax, a move widely appreciated as a major step toward supporting the elderly population of Pakistan.
Reforms to FBR Powers and Arrest Protocol
In a significant shift, the powers of the Federal Board of Revenue (FBR) have been reassessed. The finance minister announced that in cases involving up to Rs50 million, the FBR cannot arrest any individual without obtaining a court warrant. Furthermore, arrests related to tax matters will no longer be made by a single officer, but instead require the approval of a three-member FBR committee, a step aimed at ensuring transparency and accountability in tax enforcement.
Relief for Homeowners and Investors
Aurangzeb also stated that no withholding tax will be applied on personal residential properties held for up to 15 years, providing relief to property owners and reducing compliance costs.
However, to maintain fiscal balance, a 20% tax will now apply to investments in government securities, such as treasury bills and bonds.
Support for the Salaried Class
Addressing concerns over the increasing tax pressure on Pakistan’s salaried individuals, the finance minister announced that the income tax rate for individuals earning between Rs600,000 and Rs1.2 million annually will be limited to just 1%, ensuring that low-income earners are shielded from excessive taxation.
Simplification of E-Commerce Taxation
In an effort to promote digital entrepreneurship, the proposed tax on e-commerce platforms has been revised. Rather than imposing traditional taxes, the government will now implement a simplified taxation framework for the e-commerce sector, aiming to encourage compliance while also supporting online business growth.
Industrial Policy and Business Reforms
Finance Minister Aurangzeb emphasized the government’s commitment to creating a more business-friendly environment. He noted that a new industrial policy will be introduced soon to stimulate investment and industrial growth. Additionally, efforts are underway to cut public expenditure and maintain fiscal discipline.
A Balanced Budget with Targeted Relief
The minister described the Budget 2025-26 as a balanced and reform-driven financial roadmap. With a focus on targeted tax relief, greater transparency in revenue collection, and support for the elderly and working class, the budget reflects the government’s intention to promote inclusive economic growth while maintaining financial responsibility.
As stakeholders begin to assess the implications of the new fiscal measures, the government has pledged continued dialogue with the public and private sectors to refine implementation and maximize the impact of these reforms.
