ISLAMABAD — Just days ahead of final approval for its 2025-26 budget, the government on Sunday announced an additional Rs36 billion mini-budget, bringing the total new tax measures to Rs462 billion. It also moved to relax restrictions on major purchases by individuals whose declared assets had previously barred them from such transactions.
The new measures come as part of efforts to offset revenue losses from a reduced sales tax on imported solar panels and to finance a 10% salary increase for government employees — up from an earlier proposed 6%.
Under the revised criteria, bans on economic transactions will now apply only to purchases above certain thresholds: cars valued over Rs7 million, commercial plots over Rs100 million, and residential properties above Rs50 million. Similarly, the restrictions will affect stock market investments exceeding Rs50 million annually and bank accounts with deposits over Rs100 million per year. These adjustments aim to balance enforcement against tax evasion without stifling legitimate economic activity.
The mini-budget proposes new taxes including a federal excise duty of Rs10 on one-day-old chicks — a measure previously rejected by the IMF — and higher rates on dividends from mutual funds and profits on government securities. The income tax on dividends received by companies from mutual funds earning from government debt will rise from 25% to 29%, while withholding tax on government securities profits for institutional investors will increase from 15% to 20%.
The Federal Board of Revenue (FBR) tabled these measures before the National Assembly Standing Committee on Finance, chaired by PPP’s Syed Naveed Qamar. The committee endorsed the proposals, with constructive input from opposition lawmakers, notably PTI’s Arif Mobeen Jutt and Usama Mela.
The budget, which originally proposed an 18% sales tax on solar panel imports, was adjusted to 10% following an agreement with the Pakistan Peoples Party. The expected revenue from this tax has now been revised down from Rs20 billion to Rs12 billion.
To further fund salary hikes, the government also plans to raise the lowest income tax rate for the Rs100,000 monthly salary slab from 1% to 2.5%, despite internal opposition from the finance ministry.
The government aims to meet its ambitious Rs14.13 trillion tax target for the next fiscal year on the back of these measures and promised enforcement. The National Assembly Standing Committee also approved the Finance Bill 2025-26, incorporating recommendations from both the Senate and NA finance panels.
Additionally, a uniform 10% sales tax will apply to both imported and local cotton to address long-standing industry concerns.
The FBR chairman confirmed that six new tax measures were shared with the IMF, of which three have received the Fund’s approval.
