Govt Rules Out More Salaried Tax Relief

Finance Minister Muhammad Aurangzeb has ruled out the possibility of introducing additional tax relief or salary-related concessions for the salaried segment during the current budget cycle, stating that the government's available fiscal space has already been fully utilized through the proposed Rs52 billion relief package.

Addressing the National Assembly Standing Committee on Finance and Revenue, the finance minister stated that while no further measures could be accommodated in the ongoing fiscal year, the government remains open to considering additional relief for salaried taxpayers in the next budget.

During the meeting, committee members, led by Chairman Naveed Qamar, pressed the government to provide greater support to salaried individuals, noting that the segment contributes approximately Rs625 billion annually in tax revenues and remains one of the country's most compliant taxpayer groups.

The Federal Board of Revenue (FBR) presented estimates regarding the financial implications of various Finance Bill proposals. However, officials requested that specific figures not be made public due to ongoing engagements and policy discussions with the International Monetary Fund (IMF).

The committee approved a proposal to abolish advance tax on foreign television drama plays, despite observations that the levy had been generating revenue for the national exchequer.

Members also endorsed a proposal to impose a Federal Excise Duty (FED) of Rs80 per litre on petroleum products, naphtha, and white spirit. According to FBR officials, the objective of the measure is to discourage the blending of lower-grade petroleum products with higher-value fuels such as petrol and high-speed diesel. The measure is expected to generate approximately Rs23 billion in revenue, which will be distributed between the federal and provincial governments.

Furthermore, the committee approved revised withholding tax rates on a range of service sectors. Under the proposal, a tax rate of 7% of the gross amount payable will apply to transport services, freight forwarding operations, air cargo services, courier services, manpower outsourcing arrangements, and hotel-related services.

For Information Technology (IT) and Information Technology-Enabled Services (ITeS), a reduced tax rate of 4% was approved to support growth within the technology sector.

Independent professionals, including doctors, lawyers, architects, accountants, software engineers, consultants, and freelance developers, will be subject to a 15% tax rate under the approved framework.

The committee also approved amendments relating to taxation of gains derived from certain debt securities. Under the revised proposal, tax deducted under Section 151A on capital gains from the disposal of specified debt instruments will increase from 15% to 20%.

Committee members raised concerns regarding the continued existence of the non-filer category. In response, FBR officials stated that the category had been retained following recommendations received through parliamentary consultations.

The committee additionally endorsed the introduction of a defined threshold for non-filers seeking participation in Pakistan's stock market.

Discussions were also held on a proposal to impose Special Excise Duty (SED) on imported luxury vehicles. FBR officials informed members that imported vehicles with engine capacities ranging from 2,000cc to 3,000cc would attract a 40% SED, while vehicles exceeding 3,000cc would be subject to a 41% SED.

However, the committee deferred its decision on the proposed duties applicable to imported luxury vehicles for further consideration.

Concluding the discussion, the committee emphasized that tax enforcement measures should remain transparent, proportionate, fair, and consistent with principles of due process and natural justice, while ensuring that deliberate tax evasion continues to be addressed through appropriate legal and regulatory mechanisms.