Islamabad:
On Thursday, the National Assembly approved RS17.6 trillion worth the budget along with RS463 billion new taxes, which brought the digital economy on the occasion of tax law, but almost canceled the largest enforcement measure to prohibit financial transactions from unjustified persons.
The National Assembly approved the second budget for the Government of Prime Minister Shehbaz Sharif by a pleasant majority. During a vote on a clause, the coalition government mustered the support of 201 members of the National Assembly against 57 votes from the opposition parties.
It was also the second budget presented by Finance Minister Muhammad Aurangzeb in the National Assembly. With the approval of the Assembly and the subsequent consent of President Asif Ali Zardari, the Finance Act 2025 will take effect from Tuesday.
The National Assembly approved an RS17.6 trillion budget for the financial year 2025-26, which made the largest award of RS8.2 trillion for interest payments.
Defense expenses would consume RS2.55 trillion, the biggest cost in budget, excluding expenses for the armed forces development program and military pensions.
The grants are the third largest head with over RS1.1 trillion allocation, followed by over RS1 trillion for pensions, RS1 trillion for development expenses and another RS917 billion to run the civilian government.
The National Assembly also effectively approved the income of Beaconhouse National University, Federal Ziauddin University, Punjab Police Welfare Organization and Army Officers’ Benevolent Fund and Bereeaved Family Scheme from Tax.
SKAT on the contracts in the national logistical cell (NLC) has been determined at least 3% of the gross value of the contracts. However, if the total liability is more than the collected tax, NLC will be charged to the normal income tax rate of 29%, according to the bill approved by the National Assembly.
Arrest powers for the Federal Income Council will remain in the law, but with the inclusion of some more protective measures, as stated by both Pakistan People’s Party Bilawal Bhutto Zardari and Deputy Prime Minister Ishaq Dar.
This is the best budget that any government can give in challenging circumstances, the chairman FBR said while talking to Express Pakinomist. He said there have been some basic principles in the budget, including creating deterrence against fraud and providing a framework for registration of taxpayers for VAT purposes.
In order to deter the use of cash, the chairman FBR said that the National Assembly has approved not to give the expenditure of the expenses if the value of the cash payment is above RS200,000. Likewise, the adjustment of the input tax has also been rejected by cash payments of supplies beyond a particular threshold, he added.
Langrial said that foreign suppliers and digital marketplaces have also been brought under tax law.
The National Assembly approved the RS463 billion worth of new tax measures, including RS36 billion introduced after the presentation of the budget in the National Assembly on June 12. The biggest measures in the budget were to introduce taxes, both on sale and income, on online platforms, e-commerce, cash-by-delivery of couriers and tax on digital services such as streaming.
A new climate support Levy RS2.5 per Liter of tax on each liter of gasoline and diesel. Another new tax of 1% to 3% has been charged with conventional fuel -based cars to subsidize electric vehicles. Pensioners have been brought to the taxi, but only annual pensions of over RS10 million are taxed at a rate of 5%. The fourth new tax is the RS10 Federal Excise on every day old chicken sold in the country.
The government had claimed to collect RS389 billion in the next financial year on the back of the main target of enforcing the ban on the financial transactions from the unjustified persons. The Minister of Finance had warned in his press conference after the budget that if Parliament did not pass this law, up to RS500 billion mini-budget would be introduced.
The government on the “instructions” of the Prime Minister has diminished these strict powers down.
The National Assembly approved that the ban on buying a housing plot or houses of an unjustified person will only apply if the value of the property is over 50 million Rs. This limit is over RS100 million for commercial reasons or properties. The unjustified persons can still buy up to RS7 million cars.
President FBR Rashid Langrial said that the government has created the principle of unjustified in the first step and the boundaries can be revised in the future.
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 unbalancing relationship applies only if the value of cash extracts from the bank account is more than RS100 million a year. The unbelievement condition of stock market investments would be applicable if the cumulative investment in one year is more than RS50 million.
However, the non -eligible persons cannot maintain saved accounts in the banks.
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.
The National Assembly also approved to increase the income tax rate on income derived from the debt part of mutual funds issued to companies from 25% to 29%. It also approved to increase the income tax rate on the profits earned by giving loans to the government from 15% to 20%.
The National Assembly escaped a federal excise duty (bold) of RS10 per year. Day old chicken. 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 National Assembly approved 10% VAT on the import of solar panels.
Component of tax fraud
The National Assembly approved to give the arrest powers to FBR in cases of turnover tax fraud after several rounds of negotiations between PPP and PML-N.
According to the law passed by the National Assembly, a person cannot be arrested in the study stage for turnover tax fraud. In the event of arrest, the defendant has the right to obtain bail from the court. These two new protective measures were added after the latest round of negotiations between PPP and PML-N Wednesday.
President of Pakistan Peoples Party Bilawal Bhutto Zardari said on Thursday that his party wholeheartedly supported the federal budget after the government accepted its demand to exempt income tax for paid persons earning RS100,000 and reducing VAT on solar panels.
However, unlike Bilawal’s claim, the government has not exempted RS1.2 million wage income from the tax. The income tax of up to RS1.2 million annual incomes will be 1% compared to 5% before the budget, according to the bill approved by the National Assembly.
The income tax on the annual income of RS1.2 million is exempt from the PPP demand, Bilawal Bhutto said while talking on the floor of the house.
Bilawal also said the government also accepted PPP’s reservations about giving arrest powers to FBR. The government agreed that the arrest powers will only be limited to the forgery of VAT, and in the study stage no arrest will be arrested, Bilawal said.
The tax fraud will also be a fair offense, the PPP chairman said, announcing his party’s agreement with the government about the arrest forces.
Express Pakinomist reported on Thursday that PPP had refused to vote on the bill due to a proposal to give arrest powers to FBR. However, Deputy Prime Minister Ishaq Dar convinced PPP to withdraw the objections.
DAR also told The Express Pakinomist that new protective measures have been added to the Finance Act to tackle PPP’s concerns.
The PPP chairman said the government also increased the Bisp budget by 20% according to PPP’s demand. The government has awarded RS716 billion to Bisp for the next financial year.
