ISLAMABAD: Finance Minister Senator Muhammad Aurangzeb Monday said the powers of the Federal Board of Revenue (FBR) to arrest individuals had been strictly regulated under the prime minister’s special directives.
Winding up the budget debate in the National Assembly, Aurangzeb said in cases involving Rs50 million or more, the FBR will not arrest anyone without a court warrant, and only under specific conditions, including deliberate evasion after three notices, an attempt to abscond, or formal referral for prosecution.
Arrests must also be approved by a three-member FBR committee, and the accused must be presented before a special judge within 24 hours, ensuring protection against arbitrary detention and abuse of authority.
The minister said the Finance Bill had proposed restrictions on large asset purchases by undocumented individuals. However, following the PM’s direction, these restrictions would not apply to the residential houses up to Rs50 million, commercial plots or properties up to Rs100 million, and purchase of vehicles worth up to Rs7 million.
Moreover under the existing law, the capital gains tax will not apply to the property sold after six years of purchase, provided it had been acquired before July 1, 2024.
However, it would be subject to 4.5 to 6 percent withholding tax on purchase, which was generally returned on filing returns. The property in personal use for 15 or more years would be exempt from the withholding tax, he said.
The finance minister said in view of the positive contribution of e-commerce to the economy, the government had rationalized the tax in order to help it flourish.
The minister said the Budget 2025–26 was a balanced plan focused on providing public relief, promoting industry, curbing government expenditures, enhancing revenues, and ensuring fair tax-enforcement.
“All these measures are aimed at fostering sustainable growth and driving an export-led economy,” he said. He pointed out the major relief announced for the salaried class.
The income tax rate for those earning up to Rs3.2 million was reduced, while the tax was cut from proposed 2.5 percent to 1 percent for those earning between Rs0.6 million and Rs1.2 million annually.
He clarified that no tax would be imposed on pension commutation or gratuity, adding that only individuals receiving pensions above Rs10 million will be taxed, while those over 75 years of age were fully exempt.
He also mentioned that the proposed 18 percent sales tax on imported solar panel components had been reduced to 10 percent and will apply only to 46 percent of imported items, hence there would only be a 4.6 percent increase in the price of imported solar panels.
He also condemned opportunistic hoarding and artificial price hikes by some market players ahead of the new tax’s enforcement, warning that a strict legal action will be taken in coordination with the provincial governments.
He said while export facilitation schemes in recent years allowed exporters to import raw materials without paying taxes and duties, the policy unintentionally distorted market prices of domestically produced cotton and yarn, adversely affecting the local farmers.
The government has proposed sales tax on the import of raw cotton and yarn, reduction in the price gap between imported and local products and support for the domestic agriculture sector.
The finance minister informed the House that the new tax measures had been carefully designed to avoid burdening the common man and the focus was on high-income segments and wealthier businesses.
He said under Prime Minister Shehbaz Sharif’s special directive, export-oriented industries had been largely exempted from new taxes to preserve their global competitiveness.
Regarding the income tax reforms, he proposed raising the tax rate on inter-corporate dividends derived from mutual funds and similar instruments from 25% to 29%, bringing it in line with other sources of income.
Meanwhile, returns on investment in government securities by the companies will now be taxed at 20%, up from the existing rates.
He said the government had proposed a tax of Rs10 per broiler chick, citing the poultry industry’s minimal tax contribution.
The minister warned that the ongoing Iran-Israel tensions might affect regional economic stability; however, he assured the House that the government was closely monitoring the developments.
“Prime Minister Shehbaz Sharif had constituted a high-level committee on June 14 to assess the impact of this conflict on Pakistan’s economy,” Aurangzeb said.
He said the government was committed to steering the economy toward sustainable growth while protecting the vulnerable and documenting the untapped domestic market potential.
He termed documentation of economy the most important initiative of the budget, which would help reduce informality, enhance exports, and improve revenue streams.
The minister announced an initiative in collaboration with the British Asian Trust to help equip the youth with market-aligned skills for long-term employment.
On the agriculture sector, he said the government was launching a collateral-free loan programme, offering loans up to Rs1 million to the farmers owning up to 12.5 acre land to cover seeds, fertilizers, pesticides, diesel, and other essential inputs. Health and crop insurance facilities will also be provided under the scheme.
The government will also introduce an electronic warehouse receipt system, allowing the farmers to store crops securely and obtain better market prices, thereby contributing to the national food security.
He further highlighted the upcoming policy measures, including a new Industrial Policy, progress on the Electric Vehicle (EV) Policy, and comprehensive energy sector reforms aimed at achieving sustainable growth.
He also announced a 20-year loan scheme for low-income individuals to help them build or purchase houses. Under the Women Inclusive Finance Program, he said, loans worth approximately Rs14 billion had been provided to over 193,000 women. In the coming year, another Rs14 billion will be extended to women with support from the Asian Development Bank.
