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Business Recorder
7 hours ago
- Business
- Business Recorder
Budget FY26: Aurangzeb announces major tax relief for salaried class, solar sector
Finance Minister Muhammad Aurangzeb, in his address to the Senate, on Saturday, announced key relief measures in the federal budget for FY2025-26, including a significant income tax cut for the salaried class and a reduction in General Sales Tax (GST) on imported solar panels. He emphasised that individuals earning between Rs600,000 and Rs1.2 million annually will now be taxed at just 1%, down from 2.5% proposed in the budget for FY2025-26. It is pertinent to mention that, according to the budget proposals for FY26, the tax rate for those earning between Rs600,001 and Rs1.2 million was reduced to 2.5% from 5%. Pakistan salaried class rejects govt's claim of giving relief in income tax Addressing the Senate on Saturday, the finance minister said that low- and middle-income individuals play a vital role in our economy. 'This is the segment that endures inflation and pays taxes,' he acknowledged. The Senator said that the proposal to reduce income tax on this salaried class was already part of the budget suggestions. 'In this regard, the government, amid directives from the prime minister, has reduced the income tax rate for those earning between Rs600,000 and Rs1.2 million annually — from 2.5% to just 1%,' he told the house. The minister was of the view that the implementation of a 1% income tax rate is both 'a practical and symbolic recognition' by the government that it does not want to burden this class. 'We hope this step will not only increase compliance but also restore their confidence in the tax system,' he said. Meanwhile, Aurangzeb stated that the salaries and pensions of government employees have been increased by 10% and 7%, respectively. The finance minister reiterated that the government did not introduce a mini-budget during the outgoing fiscal year and maintained fiscal discipline. He informed the upper house that the federal government expenditure for FY26 has increased marginally by 1.9%, far lower than in previous years. GST on solar panels lowered to 10% Additionally, Aurangzeb told the Senate that the proposed 18% GST on solar panel imports has been lowered to 10% following consultations with lawmakers. 'The government in its budget proposed to impose an 18% GST on imported solar panels. This was done to protect local industries and provide a level playing field, and promote the development and investment in solar technology in Pakistan,' he said. However, in light of detailed deliberations on the budget in both houses, the government has decided to reduce the proposed tax to 10%. Moreover, this tax will apply only to 46% of imported components, said Aurangzeb. 'With this measure, the price of solar panels will increase by 4.6%,' he said, adding that the government remains committed to promoting renewable energy. Aurangzeb informed the house that the government has received reports of profiteering and hoarding of solar panels by certain elements. 'It is condemnable that these opportunistic actors have artificially increased prices even before the proposed measure has come into effect. I strongly warn such elements that the government will take every possible step in the public interest,' he said, adding that legal action will be taken against those involved.
Express Tribune
2 days ago
- Business
- Express Tribune
Stocks fall as Mideast conflict sparks selling
Listen to article Pakistan Stock Exchange (PSX) ended lower by over 450 points on Thursday following a volatile session as early gains, driven by policy optimism, were wiped out by selling pressure amid escalating Middle East tensions. Earlier, trading opened on a robust note in the wake of federal cabinet's approval of a large-scale circular debt resolution plan worth Rs1.2 trillion, which fuelled broad-based buying in energy sectors. However, news of Iran's missile strikes on Israel rattled investors, leading to a sharp reversal. The heightened tensions spurred profit-taking, particularly in fertiliser and cement sectors. Banks emerged as a safe-haven, providing some support. Arif Habib Corp MD Ahsan Mehanti commented that stocks closed lower on fears of escalation in Middle East tensions. "Weak rupee and a slump in global equities were factors behind panic selling," he said. At the end of trading, the benchmark KSE-100 index registered a drop of 463.34 points, or 0.38%, and settled at 120,002.59. Arif Habib Limited Deputy Head of Trading Ali Najib noted that geopolitical ripples drove bulls to sidelines as the KSE-100 index extended losses by closing at 120,003, just above the key psychological level of 120k. The index reflected a day-on-day decline of 463 points. The trading session opened with a strong bullish momentum following the cabinet's approval of over Rs1.2 trillion for circular debt resolution. This development was well-received by investors, prompting heavy buying in key energy stocks, including OGDC, Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO) and Hub Power, he said. However, news of Iran's attack on the Israeli capital weighed on bullish sentiment, triggering profit-taking. As a result, the index lost its upward momentum and briefly fell below the 120,000 mark, hitting the intra-day low of 119,770, down 696 points, Najib added. KTrade Securities, in its report, stated that stocks extended their downward trend as escalating Israel-Iran tensions weighed on investor sentiment. The KSE-100 index shed 463 points to close at 120,003, retreating from the intra-day high of 121,745. Market activity remained muted, with total volumes at 598 million shares. Sector performance was broadly negative, where power, cement and oil and gas sectors faced steep losses, it said. Key index laggards were Pakgen Power, Engro Fertilisers, Engro Holdings, Lucky Cement and Mari Petroleum. The banking sector was the sole bright spot, largely supported by UBL, KTrade added. Topline Securities reported that the bourse kicked off trading on a strong footing, buoyed by news that the federal cabinet had green-lighted a financial restructuring plan aimed at slashing Rs1.275 trillion in circular debt within the power sector over the next six years. Riding on that optimism, the index surged to the intra-day high of 1,279 points. However, the bullish momentum was short-lived as profit-taking set in later in the day in line with global market trends, it said. Rising geopolitical tensions, particularly the intensifying stand-off between Israel and Iran, dampened investor sentiment and led to a broad-based pullback, overshadowing the earlier euphoria and highlighting the fragility of market confidence. On the upside, index heavyweights from the banking sector provided some support, contributing 203 points. However, the gains were offset by power and cement sectors that pulled the index down by 270 points, Topline added. Overall trading volumes decreased to 604.5 million shares compared with Wednesday's tally of 707.3 million. Shares of 459 companies were traded. Of these, 155 stocks closed higher, 269 fell and 35 remained unchanged. WorldCall Telecom was the volume leader with trading in 64.6 million shares, down Rs0.01 to close at Rs1.49. It was followed by Sui Southern Gas Company with 35.6 million shares, falling Rs0.96 to close at Rs43.28 and First Prudential Modaraba with 30.3 million shares, losing Rs0.3 to close at Rs4.31. Foreign investors sold shares worth Rs7.6 million, the National Clearing Company reported.
Business Recorder
2 days ago
- Business
- Business Recorder
Pakistan salaried class rejects govt's claim of giving relief in income tax
Representatives of the Salaried Class Alliance of Pakistan (SCAP) said on Thursday the government had done a 'number juggling' and given almost no relief in income tax to the salaried individuals in the budget proposals for the fiscal year 2025-26. In a press conference at the Karachi Press Club on Thursday, they pointed out that the tax authorities have targeted to collect Rs540 billion in income tax from employees working in regulated sectors in FY26, compared to Rs550 billion to be received in the outgoing FY25. 'The Rs10 billion relief to the entire working class nationwide is a so-called relief. This is number juggling,' said Bilal Farooq Rizvi, a member of the SCAP. 'We reject the government's claim of relief to the salaried class people (in the budget 2025-26),' he said. According to the Federal Board of Revenue (FBR) reports, the income tax collection from salaried class people would be Rs550 billion in FY25, higher by Rs112 billion compared to FBR's set target for the outgoing year. Numbers speak: Sindh agriculturalists spend more on vehicle registration, pay less in income tax According to the budget proposals for FY26, the tax rate for those earning Rs600,001 to Rs1.2 million has been slashed to 2.5% from 5%. Individuals earning between Rs1.2 million and Rs2.2 million will pay 11%, down from 15%, along with a drop in the fixed tax component from Rs30,000 to Rs6,000. For the Rs2.2 million to Rs3.2 million bracket, the rate has been reduced to 23% from 25%, and the fixed tax lowered from Rs180,000 to Rs116,000. For those earning above Rs3.2 million annually, the rates remain unchanged. The 30% tax on incomes up to Rs4.1 million and 35% for those earning more continues. However, fixed taxes for the two slabs have been reduced to Rs346,000 and Rs616,000 from Rs430,000 and Rs700,000 respectively. A slight relief has also been provided in the form of a 1 percentage point cut in the surcharge, down to 9% from 10% for individuals earning more than Rs10 million a year. Adeel Khan, another SCAP member, claimed 'the income tax collection from salaried people has jumped 7 to 8-time in the past 3 to 4-year, increasing to Rs550 billion in FY25 compared to Rs70-80 billion a few years ago.' Budget 2025-26: Pakistan govt offers tax relief to salaried class, but representatives unhappy The government has targeted salaried class people to achieve the FBR tax collection target of Rs14.1 trillion in FY26, 'as it knows this is the soft target and they will not restore to violent protests and sit-ins and will neither block roads like political parties and shopkeepers do to get their demands accepted,' he added. Khan said the government provided a meager relief of a maximum of Rs7,000 a month in income tax to the people appearing in middle income groups, reducing their monthly tax burden to merely 'Rs493,000 a month in FY26 from Rs500,000 a month paid in FY25'. The employees working in the formal sectors were given a minimum relief of only Rs20,000 a month in income tax to the people falling in the middle income brackets. 'The provided so-called relief is no relief. This would make almost no difference in our lives,' he said. SCAP member Iesha Fazal said, 'The provided relief is insignificant. This is tantamount to playing with the salaried class people. This is a joke. We reject it'. They appealed to the authorities concerned to reduce the income tax rates by at least 2.5% for all the taxable slabs, including the individuals falling in the upper income brackets. The government can still make changes in its proposals, as the Parliament is yet to give its official nod to the proposed budget and Finance Bill 2025. 'Pakistan salaried class paid 5 times more taxes than exporters, retailers in outgoing FY25' Another SCAP member Rizwan Hussain said they would file a case in a court of law to get the due relief in income tax if the government approved the proposed tax rates as it was in the Finance Bills 2025. He reiterated SCAP's old demand of removing the super tax completely, which the government reduced by 1% to 9% in the budget proposals for FY26. Hussain also demanded relief in taxes on investment in mutual funds and similar investment products FY26.
Express Tribune
3 days ago
- Business
- Express Tribune
Senate panel rejects tax on online businesses
The Senate Standing Committee on Finance reviewed the Finance Bill 2025 on Wednesday and recommended a zero-rated tax on the income of up to Rs1.2 million and rejected a proposal to impose tax on individuals doing small online businesses. During a meeting, chaired by its chairman Saleem Mandviwala, the committee approved the proposal to impose tax on the income of online academies and teachers but opposed the levy of tax on the income of the Islamabad Club. Federal Board of Revenue (FBR) officials informed the meeting that teachers were providing online digital education services, earning Rs20-30 million. They added that a new clause had been introduced in the Finance Bill to impose tax on those doing e-commerce business, using online marketplaces. All individuals providing services via the internet and electronic networks will be affected, FBR officials said. They added that the tax will also apply to music, audio and video streaming platforms, cloud services, online software application providers, telemedicine and e-learning services. The tax would also be imposed on online banking services, architectural design services, research and consultancy reports, accounting services and other online facilities in the form of digital files, the FBR officials stated. The committee rejected a proposal to tax individuals doing small online businesses. The FBR chairman said that those with an annual income of 1.2 million will have to pay Rs12,500 in taxes. Committee member Senator Shibli Faraz said that there should be no tax on the income of Rs600,000 to Rs1.2 million. FBR Chairman Rashid Langrial told the committee that it had been decided to collect tax from entertainment clubs, including the Islamabad Club. However, the committee chair opposed the move. Langrial said that the common man did not benefit from this club, as it was the luxury of 300 people. The FBR officials said that there was a proposal to impose restrictions on the purchase of property and vehicles by non-filers. They added that a limit of 130% of the income had been set for the purchase of property by the non-filers. Senator Mohsin Aziz said that the limit of 130% for the purchase of property by non-filers should be increased. The committee recommended increasing the limit to 500%. Finance Minister Muhammad Aurangzeb said that steps were being taken to bring non-filers into the tax net.
Business Recorder
3 days ago
- Business
- Business Recorder
FBR proposes tax on online academies, recreational clubs
ISLAMABAD: The Federal Board of Revenue (FBR) has proposed to impose tax on the income of online academies and teachers, those using online marketplaces in e-commerce business, as well as to collect income tax from recreational clubs including Islamabad Club. The Senate Standing Committee on Finance and Revenue, chaired by Saleem Mandviwalla, held its sixth consecutive session on Wednesday, where 'Income Tax' provisions of the Finance Bill 2025-26 were discussed. The Committee was briefed on the tax reductions provided to salaried class under various slabs. The FBR chairman stated that the tax on the salaried class has been significantly reduced. The committee was informed that tax on salaried class coming under the tax slab (Rs600,000- 1200,000) annual income was reduced from five percent to 2.5 percent. He said that those with an annual income of Rs1.2 million will have to pay Rs12,500 in tax throughout the year, and the surcharge on income of more than Rs10 million has been reduced from 10 percent to nine percent. The committee recommended that the individuals earning monthly income of one lac should be exempted from the tax. The FBR officials, while giving a briefing, said that in the budget it has been decided to impose tax on the income of online academies and teachers. Teachers across the country are providing online digital education services. Tutor academies are earning Rs20 million to 30 million. A new clause 17C has been introduced in the Finance Bill 2025. Under the same measure, e-commerce businesses that operate via online marketplaces will also face new tax obligations, as authorities seek to broaden the tax base in the rapidly growing digital sector. The committee was further informed that it has been proposed to collect tax from entertainment clubs including Islamabad Club. In the Finance Bill 2025-26, income tax has been introduced on recreational clubs which were previously exempted from tax. State Minister for Finance and Revenue, Bilal Azhar Kayani, stated that the recreational clubs are liable to pay tax, where their income exceeds the expenditure, and such steps have been taken to broaden the tax net of the country. The Senate Standing Committee on Finance opposed the imposition of tax on the income of Islamabad Club and recommended tax exemption on annual income of Rs1.2 million, while the proposal of tax on small individuals doing online business was rejected. Discussing the newly introduced tax on e-commerce, the committee commented that the FBR should imposed tax on goods rather than services. Committee members recommended for removing Section 7E and equalise the tax rate for property seller and buyers. However, FBR told the committee that 7 E cannot be waived off as it has been agreed upon with the International Monetary Fund (IMF). The committee also expressed reservations over freezing bank accounts on notices by FBR. Federal Minister for Finance and Revenue also highlighted the newly introduced mortgage facility. He stated that mortgage will be available for houses up to 2,000 sq feet, and the individuals will also be eligible for tax credit not exceeding 30 per cent of total income. Commenting on the FBR's new move of disallowing 10 per cent in case of purchases from non-registered suppliers, the committee opined that such move will discourage competitive markets, as the number of registered suppliers is nominal across the country. The committee also expressed concerns over the newly-inserted clause, which restricts the 'Eligible Person' from making any purchase exceeding 130 per cent of wealth reflected in his/ her last year's statement. The committee recommended that such threshold should be exceeded to 400 per cent of previous year's statement. In attendance were Senators Syed Shibli Faraz, Mohsin Aziz, Fesal Vawda, Anusha Rahman Ahmad Khan, Muhammad Abdul Qadir, Ahmed Khan, Shahzaib Durrani, and Federal Minister for Finance and Revenue Muhammad Aurangzeb, State Minister for Finance and Revenue Bilal Azhar Kayani, FBR Chairman Rashid Mahmood Langrial and other senior officials of relevant departments. Copyright Business Recorder, 2025
