Aurangzeb unveils new tax measures, targets poultry, mutual funds & govt securities
Finance Minister Muhammad Aurangzeb unveiled new taxation measures, including levies on income generated from mutual funds and government securities, at the National Assembly on Monday.
Addressing the lower house, the finance minister presented three more budget proposals.
'The first of these is to increase the tax rate on income derived from the debt portion of mutual funds issued to companies from 25% to 29%. Secondly, it is proposed to impose a 20% tax on profits made by corporations and companies on investments in government securities,' he said.
The government has also proposed to tax the poultry sector, said Aurangzeb.
'It is proposed that a Federal Excise Duty (FED) of Rs10 per day-old chick should be imposed on hatchery chicks, so that this sector can also contribute to the national exchequer,' he said.
The finance minister maintained that the government has presented a balanced budget for the fiscal year 2025-26.
'On one hand, we have kept government expenditure under control, while on the other, much emphasis has been laid towards increasing tax base and its compliance,' said Aurangzeb.
Imported cotton yarn: APTMA hails 18pc sales tax imposition
Aurangzeb said that tariff rationalisation is vital, stating: 'By lowering import duties, our business unit cost would decrease, which will facilitate exports.'
He said that the government will soon announce an industrial policy, whereas consultation on EV policy has already been initiated.
Moreover, the government, in collaboration with British Asian Trust, would soon launch Pakistan's first Skill Impact Bond (SIB). The SIB links funding to the achievement of outcomes, he said.
Affordable Housing
The government, in its bid to promote affordable housing, would launch a 20-year loan scheme for the low-income segment, informed Auranzgeb.
He clarified: 'Only those dams will be pursued that are already approved.'
On Saturday, Aurangzeb, in his address to the Senate, announced key relief measures in the federal budget for FY2025-26, including a significant income tax cut for the salaried class and a reduction in General Sales Tax (GST) on imported solar panels.
The finance minister, on Monday, reiterated that individuals earning between Rs600,000 and Rs1.2 million annually will now be taxed at just 1%, down from 2.5% proposed in the budget for FY2025-26.
He said that tax has been imposed on individuals receiving an annual pension of over Rs10 million, while, on the special instructions of the Prime Minister of Pakistan, pensioners over the age of 75 are exempt from all types of taxes.
Aurangzeb added that the proposed 18% GST on solar panel imports has been lowered to 10%.
Powers of FBR
Aurangzeb informed the lower house that on the special instructions of the Prime Minister, the existing powers of the FBR regarding tax fraud and the amendments made through the Finance Bill were reviewed once again, under which tax fraud has been categorised into cognizable and non-cognizable offences.
'In cases involving up to Rs50 million, the FBR will not be able to arrest without a court warrant,' he said.
In addition, any one of the following conditions must be fulfilled for arrest: 1) the accused deliberately did not become a part of the inquiry despite three notices; 2) the accused tries to escape; and 3) tampers with the record.
'Despite this, the approval for arrest will be given by a high-level three-member committee of the FBR, instead of an officer, and it will be necessary to present the arrested persons before the court of a special judge within 24 hours,' he said.
In addition, it will be ensured that no citizen is abused in this process, he added.
Real estate sector
In the real estate sector, Aurangzeb noted that in the past, people used to buy large properties beyond their declared financial means. Under Section 114C of the Income Tax Ordinance, the Finance Bill proposed to prohibit such people from engaging in large financial activities.
'On the instructions of the prime minister, this new law will not apply to the purchase of residential plots or houses worth up to Rs50 million, commercial plots or properties worth up to Rs100 million and vehicles worth up to Rs7 million,' said the finance minister.
Aurangzeb said that the ongoing tensions between Iran Israel are expected to disturb the region's economic situation. However, the government is prepared to deal with any situation, he assured the lower house.
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