Pakistan’s parliamentary body proposes expanded tax relief for salaried class

Pakistan’s Senate Standing Committee on Finance has proposed significant tax relief measures for the salaried class in its recommendations to the National Assembly on the Finance Bill 2025–26.

Chief among them is a proposal to double the annual income tax exemption limit from Rs600,000 to Rs1.2 million, offering major relief to middle-income earners amid rising inflation and economic pressure.

The committee’s recommendations — compiled in a report presented by Senate Chairman Salim Mandviwalla — have been forwarded to the National Assembly for consideration, Nukta has learned.

Among the key proposals:

 
• Wealth and windfall taxes: A one-time 2% wealth tax on net assets exceeding Rs500 million and a windfall profit tax on companies earning more than 20% net margins during inflationary periods (targeting sectors such as petroleum, banking, and telecom).
 
• Retail tax regime: Introduction of a simplified national retail tax at Rs3,000/month for small retailers (with turnover under Rs5 million), along with digital registration and mobile-based payments. Tax credits would be offered to incentivize digital invoicing.
 
• Green incentives: Abolishment of all sales tax and customs duties on hybrid vehicles up to 1300cc for five years. The proposal also calls for a Green Vehicle Fund to subsidize imports and promote local assembly, as well as reduced registration fees and public-private partnerships to set up hybrid servicing centers.
 
• Real estate reforms: Restoration of capital gains tax on property transactions, reduction of stamp duty to 0.5% for property purchases up to Rs20 million for filers and 1% for non-filers, to formalize and stimulate the sector.
 
• Social relief measures: A proposed increase in Employees’ Old-Age Benefits Institution (EOBI) pensions from Rs11,500 to Rs23,000 per month and making family pensions lifelong for surviving spouses. The committee also recommended a 200% hike in medical allowance for government employees.
 
• Essential goods: Withdrawal of GST on essential items such as flour, pulses, and medicines.
 
• Agriculture and energy: A 10% tax on agricultural income exceeding Rs5 million annually and removal of the Circular Debt Surcharge from the first 200 units of electricity consumption.
 
• Broader reforms: Calls for launching vocational and technical training aligned with job market demands, withdrawal of tax exemptions for elite groups including corporations, large landowners, and real estate developers, and the deferral and renegotiation of capacity payments to Independent Power Producers (IPPs).
 

The recommendations aim to balance fiscal responsibility with social equity, while providing relief to vulnerable groups and generating revenue from high-earning segments of society. It now remains to be seen how many of these proposals the National Assembly will incorporate into the final Finance Act.