Glaring mistakes emerge in govt's proposed Finance Bill 2025-26

• Bill references 2025 aviation policy and not existing policy of 2023.
• Lacks concept of registration of airlines but mandates licensing.
• Tax exemption on PIA leaves questions regarding privatisation.
  

ISLAMABAD: Days after Finance Minister Muhammad Aurangzeb tabled the budget for the fiscal year 2025-26, glaring mistakes have surfaced in the Finance Bill for 2025-26 tabled before parliament, whereby the Aviation Policy of 2015 was given as a reference, but currently, the Policy of 2023 is in place, The News reported on Monday.

In addition to this, the Federal Board of Revenue (FBR) proposed tax exemption on the import or lease of aircraft by Pakistan International Airlines Corporation Limited (PIACL). The question arises of what will happen after the possible privatisation of PIA. A question also arose as to why the same favour was not granted to other airlines operating in the country under the principle of equity.

The discrepancies come after Prime Minister Shehbaz Sharif-led government tabled the Rs17.57 trillion budget for FY26 proposing a 10% hike in the salaries of government employees along with a 7% increase in the pension of retirees.

The government, in the budget, has also projected a GDP growth target of 4.2% while laying out FBR's tax collection target of Rs14,131 billion — representing an 18.7% increase from the current fiscal year.

On the non-tax revenue front, the government has set an ambitious target of Rs5,147 billion, reflecting efforts to optimise income from state-owned enterprises and other non-tax sources.

After accounting for provincial transfers, the federal government's net revenue is estimated at Rs11,072 billion.

The total federal expenditure has been budgeted at Rs17,573 billion, with Rs8,207 billion earmarked for debt servicing — a critical component that underscores the government's commitment to fiscal responsibility.

However, the Finance Bill 2025-26 is marred with issues which include that on the lease of aircraft, there is a charge of GST on the lease amount, but it does not clarify how this issue would be settled.

Earlier, the mistake on the pension tax surfaced in the proposed Finance Bill 2025-26, which was accepted by the FBR high-ups who commented that it was unintended and would be rectified. If the Finance Bill was approved in its existing shape, it could result in bringing many pensioners into the tax net.

The Finance Bill 2025-26 gives reference to the Aviation Policy 2015. As a matter of fact, the Aviation Policy of 2019 was enacted, and in the latest revision, the Aviation Policy of 2023 is operational at the moment.

Secondly, there is no concept of registration of airlines, but there is a requirement for a licensing and operation certificate under the ambit of the Civil Aviation Act 2023. There is an immediate need for rectification in Part VI with regard to tariffs in the Finance Bill 2025-26.

The FBR has constituted anomaly committees to rectify the Finance Bill before getting the assent of parliament to convert it into an Act of Parliament.