The Finance Secretary says any relief must be offset by an equal amount of additional revenue and enforcement measures.
ISLAMABAD:
On Monday, the government refused to share the cost of the fiscal relief package with the National Assembly’s Standing Committee on Finance, which will approve the new budget, but the committee chairman said the package would cost around 360 billion rupees.
“The government is in talks with the International Monetary Fund (IMF), so it cannot reveal these figures,” Finance Secretary Imdadullah Bosal said, responding to a question from MP Jawed Hanif Khan.
Bosal went on to say that any relief must be offset by an equal amount of additional revenue and enforcement measures, a statement that is in line with the agreement with the IMF. However, he maintained that the government has privately shared the cost of the aid with the standing committee chairman.
When MNA Muhammad Javed Hanif Khan asked if the cost of the aid was Rs 360 billion, standing committee chairman Syed Naveed Qamar said “it was very close”. Later, he said the cost was approximately 360 billion rupees.
The Express PAkGazette had reported that the government had given Rs 360 billion in tax relief, including Rs 115 billion for the real estate sector and Rs 52 billion for the salaried class.
The Finance Ministry had informed the federal cabinet that the cost of reducing withholding tax for the real estate sector was Rs 115 billion.
Sources said the government was still in talks with the IMF, which was not very comfortable with the idea of halving tax rates on property purchases and sales.
It was unprofessional of the government not to share the cost of the aid with lawmakers, said MNA and standing committee member Hina Rabbani Khar.
The cabinet was further told that the impact of reducing federal excise duty rates on airline tickets was Rs 24 billion and the Rs 17 billion was the cost of reducing withholding tax rates on international debit and credit card transactions to 0.5%.
Bilal Kayani, Minister of State for Finance, said people were avoiding high taxes on business class airline tickets by either upgrading their tickets after boarding the flight or booking from abroad.
Around Rs 7 billion was the cost of abolishing the 1% capital value tax on foreign transactions, according to the government’s report to the cabinet last week.
Hamid Ateeq Sarwar, FBR member for strategic transformation, said the capital value tax had to be abolished at the request of foreign countries and also because Pakistanis were becoming non-residents to avoid the tax.
Qamar sought clarity on whether projected revenue losses had been adequately quantified and requested details of the government’s strategy to offset any resulting fiscal shortfalls.
The committee also deliberated on relief for salaried individuals in the context of persistent inflation and rising cost of living, and sought clarification on whether the proposed tax slab revisions would provide significant relief to middle-income groups.
Kayani said maximum possible relief had been extended to wage earners.
The President noted that tax relief measures must remain equitable and economically justified, while highlighting the need to broaden the tax base and improve compliance. It directed the Finance Ministry and the FBR to submit detailed revenue estimates, fiscal impact assessments and implementation plans before further consideration of the Finance Bill, 2026.
Hamid Sarwar informed the committee that the government has also decided to abolish advance payment of income tax to exporters. He said the move would help address liquidity issues.
To another question, strategic transformation members added that the government was collecting approximately Rs 400 billion a year from super tax, which it cannot immediately abolish. The supertax was introduced many years ago as an emergency measure. The government has proposed in the budget to abolish the super tax on annual income of Rs 500 crore and charge a rate of 8% on the highest income.
However, the super tax rate will be 10% for banks, oil and gas exploration companies and fertilizer companies.
Hamid Ateeq said banks’ lending to the government had risen to 80% of their total loans after ending limits on advances to deposit ratios. Violation of these limits used to attract additional taxes, which the government put an end to and as a result there is hardly any money available for private sector borrowers.
The committee was informed that the budget package comprises eleven relief measures, ten rationalization measures and five administrative reforms aimed at promoting economic growth, encouraging investment, improving documentation of the economy, improving tax compliance and strengthening revenue collection.
Kayani said the government abolished the 18% sales tax in the shipping industry in light of lessons learned from the Middle East conflict. He said there was a need to develop the local shipping industry.
Qamar was of the view that the tax had been abolished after the National Logistics Cell took over the Pakistan National Transport Corporation.
The committee was informed that the relief package includes the abolition of taxes on contraceptives and certain women-related products.
Calling taxes on sanitary products a “pink tax” is ridiculous, said MNA Sharmila Faruqui.
