FBR to propose tax cut for salaried class in next budget

• Govt's proposed Tax Laws Amendment Bill deferred until budget.
• Legislation suggests govt to set limit on property transactions.
• Exempts lower, middle-income groups to protect first-time buyers.
  

ISLAMABAD/KARACHI: Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial has said that they will propose a cut in tax rates for the salaried class in the upcoming budget, whose implementation however, will be subject to the International Monetary Fund's approval, The News reported on Thursday.

Langrial, while briefing a National Assembly panel, said that the IMF mission would be visiting Pakistan around the second week of May 2025 to discuss budgetary proposals.

Meanwhile, the government's proposed Tax Laws Amendment Bill, which sought to restrict property purchases exceeding Rs10 million without proof of taxable income, has been deferred until the 2025-26 budget.

The National Assembly's Standing Committee on Finance and Revenue approved a sub-committee report recommending that the federal government — rather than FBR — set the limit for property transaction restrictions.

It also exempted lower and middle-income groups to protect first-time property buyers. Builders and real estate stakeholders had pushed for raising the threshold to Rs50 million, but the sub-committee rejected the proposal.

During the NA panel meeting, under the chairmanship of PPP MNA Syed Naveed Qamar, the FBR chairman agreed that the revised draft will be made part of the next Finance Bill 2025-26.

In the meeting, the Pakistan Dairy Association made a presentation and proposed to the government to slash 18% GST on milk and powdered milk to 5% in the next budget. They argued that the imposition of an 18% tax on packaged milk led to a 20% decline in sales, shifting demands towards untaxed loose milk.

The informal loose milk trade gained Rs1.3 trillion, benefiting from the price differential without contributing to tax revenues. Finance Minister Muhammad Aurangzeb participated in the meeting virtually from Karachi and briefed the committee about his recent visit to Washington.

The committee was briefed on the performance of Zarai Taraqiati Bank Limited, but parliamentarians showed their dissatisfaction with the performance, especially in the context of privatising it within the envisaged deadline of December 2025.

Meanwhile, addressing a pre-budget seminar at the Federation House and during interaction with the media in Karachi, Finance Minister Aurangzeb hoped that the current account would remain surplus in current financial year.

He stated that no sector would be granted tax exemptions in the upcoming budget. Electricity tariffs have already been reduced, and the nation will receive good news regarding electricity prices with further reductions to be announced in July 2025.

Aurangzeb reiterated that a high-level Pakistani delegation would visit the US soon to discuss tariffs and trade issues. He stressed that the current challenge with the US is not tariffs but trade imbalance. Pakistan exports $5 billion to the US but imports only $2.1 billion. The purpose of the delegation’s visit is to improve this trade balance by including sectors such as soybean, cotton and other key industries.

Currently, the salaried class pays heavy income tax, and they will be given relief in the next budget. He also mentioned that during his recent visit to the US, he held over 70 important meetings, including discussions with the IMF, World Bank, China and Saudi Arabia. All institutions acknowledged macroeconomic improvements in Pakistan’s economy.

The finance minister noted that Pakistan’s foreign reserves have now reached $14 billion, and the current account is expected to remain in surplus. The Monetary Policy Committee would meet on May 5, when a decision on further interest rate cuts will be made.

He also announced that new contracts related to Reko Diq would include smelting and value-addition components, marking a shift from raw mineral exports to processed goods — a step toward long-term industrial growth.

Commenting on the closure of India’s transit corridor for Central Asia, he stated that war benefits no one and such steps are harmful to Indian transit trade.

On FPCCI's pre-budget proposals, Aurangzeb stated: "We have been reviewing all suggestions for the past two months. Each point has been evaluated by our team and independent industry experts to remove anomalies. No SRO will be issued without consultation with FPCCI and other chambers". However, he clarified that there are limits to flexibility.