While addressing the Senate on Saturday, Finance Minister
Muhammad Aurangzeb outlined major relief initiatives included in the federal
budget for the fiscal year 2025–26, with a strong focus on reducing the
financial pressure on salaried individuals and promoting clean energy
adoption.
One of the most significant announcements was a reduction
in income tax for those earning between Rs. 600,000 and Rs. 1.2 million
annually. This group will now be taxed at only 1 percent, down from
the previously proposed 2.5 percent, offering meaningful relief to
Pakistan’s low- and middle-income earners.
Solar Panel Imports: GST Reduced to
Support Clean Energy
In a major revision, the government has lowered the
General Sales Tax (GST) on imported solar panels from 18 percent to 10
percent. The Finance Minister explained that the earlier hike was meant to
encourage domestic solar manufacturing, but the decision was revised in
response to public demand and to make solar energy more accessible for
households and businesses.
However, Aurangzeb also issued a warning about artificial
price hikes and hoarding by some distributors in anticipation of these tax
changes. He stressed that strict action will be taken against those
inflating solar panel prices.
Commitment to Social Protection and
Economic Stability
The minister also announced a substantial increase in
funding for the Benazir Income Support Programme (BISP), raising the
allocation to Rs. 716 billion. This expansion will provide financial
assistance to 10 million families, further solidifying the government’s
commitment to social welfare and poverty reduction.
Reforms in FBR Powers and Budget
Transparency
To prevent misuse of authority in tax fraud cases,
the budget includes safeguards and clarifications regarding the Federal
Board of Revenue’s (FBR) powers. These adjustments aim to promote greater
transparency and taxpayer confidence in the system.
Salary and Pension Increases for
Government Employees
To ease the burden of rising living costs, the federal
government has also approved a 10 percent salary increase for government
employees and a 7 percent hike in pensions. Aurangzeb emphasized
that the state does not intend to overburden the working class, and these steps
reflect a balanced approach to economic management.
Economic Indicators Show Positive Signs
The Finance Minister highlighted encouraging trends in key
economic indicators:
- Exchange
rate improvements
- Reduced
inflation
- Federal
expenditure growth slowed to 1.9%, compared to
12% in previous years
These signs, he said, reflect a more stable and
disciplined fiscal strategy focused on long-term development rather
than short-term gains.
Senate Recommendations Welcomed
Aurangzeb expressed hope that up to 50 percent of the Senate's
recommendations will be incorporated into the final budget. He reiterated
that economic stability is not the end goal, but a milestone on the
path to sustainable growth.
What This Means…
- Lower
taxes for salaried individuals mean more
take-home income for Pakistan’s working class.
- Reduced
GST on solar panels will make clean energy more
affordable and drive wider adoption.
- Expanded
BISP coverage will support millions of
low-income families with direct financial aid.
- Salary
and pension increases offer relief amid inflationary
pressures.
- Transparent
tax reforms aim to protect citizens from
misuse of authority.
- Stable
economic indicators show signs of improving fiscal
health and governance.
- The
government’s approach reflects a shift toward people-first policies and
long-term planning.
