KEY POINTS
- Amendments to tax laws, including limits on FBR’s arrest powers, were approved
- The budget includes a 20% increase in funding for the Benazir Income Support Programme
- The income tax exemption was raised to Rs1.2 million annually
- National Assembly approved tax relief for the salaried class and reduced taxes on solar panels
ISLAMABAD: Pakistan’s National Assembly on Thursday approved the PKR 17.57 trillion federal budget for the fiscal year 2025-26, with certain amendments to the Finance Bill, despite protests from the opposition political parties.
The opposition Pakistan Peoples Party (PPP) raised objections to some provisions embedded in the federal budget, urging the government to reconsider and revise these clauses before the National Assembly’s green light on Thursday.
Finance Minister Muhammad Aurangzeb’s proposed amendments to key laws—including the Income Tax Ordinance, 2001—secured approval. The bill was read and endorsed clause by clause in the lower house of the Parliament.
Among the key changes, Aurangzeb’s revisions to the Sales Tax Act, 1990, passed by a majority, empowered committees with the authority to arrest traders implicated in tax fraud exceeding PKR50 million, curbing plans that sought to extend arrest powers directly to tax commissioners.
Importantly, the amendment safeguards that the Federal Board of Revenue (FBR) cannot exercise arrest powers during the investigation phase.
Opposition attempts to tweak the Sales Tax Act were overwhelmingly dismissed. Also, a notable amendment to the Salaries and Allowances Act, backed by the finance minister, equalized the salaries of ministers and ministers of state with those of parliamentarians—a move swiftly endorsed by the House majority during the session.
During Thursday’s National Assembly session, PPP Chairman Bilawal Bhutto Zardari welcomed and embraced the government’s decision to boost the Benazir Income Support Programme (BISP) budget by a significant 20%, hailing it as a monumental victory and a cornerstone for PPP’s backing.
Bilawal Bhutto Zardari announced a significant victory for the PPP as the government agreed to exempt income tax on annual earnings up to Rs1.2 million—a raise from the party’s original demand of Rs1 million.
He also revealed that the PPP’s firm objections to granting arrest powers to the Federal Board of Revenue (FBR) were heard, resulting in a compromise: arrest authority will be strictly confined to cases of sales tax forgery, and no arrests will be made during the inquiry phase.
Moreover, tax fraud will be treated as a bailable offense, easing fears of overly harsh enforcement. This breakthrough came after Deputy Prime Minister Ishaq Dar personally persuaded the PPP to withdraw its resistance, assuring that new protections had been incorporated into the Finance Act to safeguard citizens’ rights.
The Bill to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2025 and to amend certain laws [The Finance Bill, 2025], as reported by the Standing Committee was taken up clause by clause.
The House adopted the… pic.twitter.com/cRJ3qr5O7M
— National Assembly 🇵🇰 (@NAofPakistan) June 26, 2025
Bilawal further highlighted that, alongside these tax reforms, the government heeded PPP’s call to boost the Benazir Income Support Programme budget by 20%, earmarking PKR716 billion for the initiative in the coming fiscal year, marking a decisive win for social welfare and fiscal fairness.
Bilawal also spotlighted key tax relief measures for the salaried class and revealed that acting on PPP’s suggestions, the government halved taxes on solar panels.
Finance Minister Muhammad Aurangzeb introduced the motions for approving the Finance Bill, which the Assembly passed by majority vote.
The session has been adjourned until 11 am tomorrow (Friday).
