ISLAMABAD: Federal Minister for Finance Muhammad Aurangzeb told the National Assembly on Monday that the Federal Board of Revenue (FBR) will not be able to arrest any individual for tax evasion involving up to Rs50 million without a judicial warrant.
Speaking during the winding-up debate on the Federal Budget 2025–26, the minister described the budget as “balanced,” and stressed that it aims to reduce the tax burden on the salaried class, control government expenditures, and lay the groundwork for inclusive and sustainable economic growth.
“We have reduced taxes on the salaried class in the budget,” he said, adding that, “efforts are being made to curtail government expenditures.”
Aurangzeb said the government is introducing improvements in tax laws and will soon announce a comprehensive industrial policy. A consultation process has also begun for the country’s first Electric Vehicle (EV) policy, he added.
He emphasized that the FBR’s powers have been revised to prevent the misuse of authority. Arrests for tax evasion will now require proper judicial oversight. A three-member FBR committee will investigate tax evasion cases, and suspects will be presented before a magistrate within 24 hours, he confirmed.
Tax and Revenue Reforms
Aurangzeb introduced three new revenue measures to address the fiscal shortfall, targeting the affluent class:
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A federal excise duty of Rs10 has been imposed on one-day-old chicks.
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Higher tax rates on corporate investments in mutual funds and government securities.
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A 1% income tax on annual income between Rs600,000 and Rs1.2 million.
He said that sales tax on imported solar panels is being reduced from 18% to 10%, while prices of some panels will rise slightly due to new import duties.
The minister underlined that broadening the tax base, promoting digitalization, and enhancing compliance remain key strategies to increase revenue.
Support for Industry and Farmers
Aurangzeb said the budget also facilitates the construction industry and aims to reduce import duties to lower production costs for industries and boost exports. These steps, he noted, will also curb smuggling and promote domestic manufacturing.
He announced a flagship loan programme for small farmers, offering loans up to Rs1 million without collateral to farmers owning up to 12.5 acres of land, to be disbursed through digital channels. Farmers will also receive crop and life insurance, and a system of electronic warehouse receipts is being developed to ensure better pricing for their produce.
Expanded Social Safety and Skills Development
The minister said the budget allocation for the Benazir Income Support Programme (BISP) has been increased from Rs592 billion to Rs716 billion.
In a move to align youth development with market needs, Aurangzeb announced the launch of Pakistan’s first Skills Impact Bond, aimed at developing market-oriented skills among young people.
Aurangzeb concluded by warning that the current situation in the Gulf region could have adverse economic effects on Pakistan, and emphasized the need for preparedness and resilience.
