Islamabad:
Finance Minister Muhammad Aurangzeb formally revealed a mini budget of RS36 billion on Monday in the National Assembly and announced to exclude almost the entire population from revealing the source of income before buying a large home, a car or operating a bank account.
The limits set to reveal the source of income before making large purchases would now only target users of over 1,600 cc cars and people who own more than one-channel residential houses in larger cities and almost two-channel houses in other cities.
Effectively, this has made the chairman of the enforcement initiative of the Federal Board of Revenue (FBR) chairman Inecleict, which has also lowered the success rate to catch the tax evasion to only 3.7%.
FBR does not have the capacity to go after the people after making these purchases, and therefore the government had planned to prevent the purchases.
Aurangzeb made these messages while settling the budget debate in the National Assembly. With the settlement of speech, the formal process for approving the next financial year’s budget and tax measures began, ending with the approval of the Finance Act probably Thursday.
The Minister of Finance presented further three budget proposals for the National Assembly, which is also targeting one-day old chickens, to generate a total RS36 billion in additional taxes in the financial year 2025-26.
He proposed an increase in the tax rate on income derived from the debt part of mutual funds issued to companies from 25% to 29%. The Minister said the other incomes of the companies were already taxed at a 29% interest rate.
Aurangzeb said that the income tax rate on profits from companies and companies on investments in government debt is also increased from 15% to 20%. The government has also proposed tax on the poultry sector, where billions of rupees investments are made, Aurangzeb said.
“It is proposed that a federal excise duty (fat) on RS10 per day-old chicken should be imposed on hatchery chickens so that this sector can also contribute to National Exchequer,” he said. The government has estimated that approx. 1.5 billion chickens are produced each year and it collects RS15 billion by taxing a product that is a common diet for the poor and the rich.
The Minister said these three additional measures will not affect the industry and that the burden has been transferred to the wealthy people and institutions.
The government proposed RS36 billion.
Aurangzeb claimed that the government has presented a balanced budget for the financial year 2025-26. On the one hand, we have kept public spending under control, while on the other hand, much emphasis has been placed on increasing the tax base and its compliance, the finance minister said.
Exception
In the past, the government suggested that all these citizens should be prevented from buying larger assets if their declared wealth does not support such purchases. But the Minister of Finance announced the measure to drastically tame these powers.
“On the instructions of the Prime Minister, this new law will not apply to the purchase of housing plot or houses worth up to RS50 million, commercial plot or properties worth up to RS100 million and vehicles worth up to RS7 million,” he said.
These boundaries are “too generous” and compromise the goal of tying the purchases of white money, a senior FBR official told Express Pakinomist.
Early this year, the FBR chairman had informed the National Assembly’s Standing Committee for Funding that due to almost no capacity of FBR to revise tax declarations, the success was successful in examining the people of the source after making these purchases only 3.7%.
The government has also agreed to relax the criteria for banning financial transactions, such as buying a home, plot, car, investing in securities and maintaining a bank account of those whose declared assets do not support these purchases. It would have proposed to ban all such transactions if the declared assets do not support these purchases.
The unbalancing relationship will only be applicable if the cash account cash is more than RS100 million a year in all bank accounts for an individual. The unbelievement condition of stock market investments would be applicable if the cumulative investment in one year is more than RS50 million.
One of the genuine concerns was that FBR could end up exploiting the people in the absence of a credible online platform to determine the population’s justification to make these purchases. Because of this reason, the National Assembly’s Standing Committee for Financing had the implementation of these harsh conditions with the effectiveness of the online platform.
The Minister of Finance also announced to exempt an owner of residential property from payment of up to 6.5% withholding tax at the time of sale if the property is sold after retaining it for at least 15 years.
He said the government would not tax the benefits of retirement in the form of commuting and gratuity. But the annual pension of over RS10 million is taxed at a rate of 5%. On the instructions of the prime minister, pensioners over 75 are exempt from all types of taxes, he added.
The government, in its bid to promote affordable housing, would launch a 20-year loan scheme for low-income segment, informed Aurangzeb. He said that individuals earning between RS600,000 and RS1.2 million annually will now be taxed at only 1% – from 2.5% proposed in the budget.
He added that the proposed 18%GST when importing the solar panel has been lowered to 10%, but said it would increase prices by only 4.6%.
Aurangzeb informed the Lower House that FBR’s special instructions were FBR’s existing powers on tax fraud and the changes made through the financial proposal during which tax fraud has been categorized in cognizable and non-cognizable offenses.
“In cases involving up to RS50 million, FBR will not be able to arrest without a court order,” he said. In addition, the person can only be arrested if he does not become part of the study despite three messages; The defendant tries to escape; or tampers with the record.
He said the approval for arrest will be given by a high level of three-member committee for FBR, instead of an officer, and it will be necessary to present the arrested persons to the court of a special judge within 24 hours, “he said.
