Islamabad, June 24, 2025 – Finance Minister Muhammad Aurangzeb, while concluding the debate on the Finance Bill 2024-25 in the National Assembly, unveiled critical exemption limits concerning restrictions on economic transactions by non-filers and ineligible persons.
These exemptions, he explained, were introduced to ensure a fair balance between increasing documentation and safeguarding genuine business and personal transactions.
Aurangzeb clarified that individuals falling under the category of non-filers or ineligible persons would still be allowed to purchase residential property valued up to Rs50 million, commercial property up to Rs100 million, and vehicles worth up to Rs7 million. “These exemption thresholds are meant to facilitate legitimate economic activities for individuals outside the tax net, and the federal government may revise them based on evolving needs,” he added.
The finance minister emphasized that these exemptions aim to maintain market momentum while ensuring that non-compliance does not paralyze genuine economic participation. Aurangzeb reaffirmed the government’s broader commitment to formalizing the economy, stating that these exemptions would allow for smoother transitions without disrupting essential transactions.
A major highlight of Aurangzeb’s budget wrap-up was the withdrawal of sales tax and duty exemptions on imported cotton and yarn. The decision, he noted, was taken to protect local cotton farmers and revive Pakistan’s domestic textile industry—one of the country’s key economic engines. “Over the last three years, a substantial pricing gap between imported and domestic cotton has hurt our farmers and discouraged local production,” he explained.
By eliminating these exemptions, the government aims to boost domestic cotton output, reduce import dependency, and revive spinning mills. Aurangzeb stressed that this move would not only uplift rural economies but also help conserve precious foreign exchange reserves, aligning with the government’s long-term economic sustainability plan.
To make up for the revenue shortfall caused by reductions in sales tax on solar panels, Aurangzeb announced Rs36 billion in additional tax measures for fiscal year 2025-26. However, he clarified that the overall tax increase was limited to just 0.25 percent of GDP. “Our goal is not to burden the existing taxpayers but to expand the tax base,” he said. “This balanced budget reflects our commitment to fiscal responsibility, compliance improvement, and transparency.”
Aurangzeb also highlighted several fiscal reforms, including a push for digitalisation, simplification of tax laws, and relief for salaried individuals. “By focusing on digital tax solutions, we aim to create a more inclusive and efficient economic system,” he remarked.
Further reflecting the government’s commitment to inclusive economic development, Aurangzeb announced an increase in the allocation for the Benazir Income Support Programme (BISP)—from Rs592 billion to Rs716 billion—benefiting nearly 10 million families. In addition, he revealed the launch of Pakistan’s first Skills Impact Bond in collaboration with the British Asian Trust, aimed at providing results-based vocational training.
The finance minister also shared details of a major agricultural financing initiative under which smallholder farmers would be eligible for unsecured digital loans of up to Rs1 million. These loans would cover essential inputs like seeds, diesel, and fertiliser. An Electronic Warehouse Receipt System will also be introduced to help farmers store and market their crops efficiently.
In the housing sector, Aurangzeb announced a 20-year affordable home financing program targeting first-time, low-income homebuyers. The initiative is expected to stimulate the construction sector and support long-term economic growth.
Highlighting progress in gender-focused economic reforms, Aurangzeb revealed that under the Women Inclusive Finance Programme, Rs14 billion in loans had already been disbursed to 193,000 women, with an equal amount planned for the upcoming year in collaboration with the Asian Development Bank (ADB).
Addressing tax relief for salaried individuals, he said the government had reduced the tax rate for those earning up to Rs3.2 million annually. For income between Rs600,000 and Rs1.2 million, the rate was slashed to just 1 percent on the instructions of Prime Minister Shehbaz Sharif.
On the controversial issue of pension taxation, Aurangzeb clarified that only individuals receiving pensions above Rs10 million annually would be taxed. “Pensioners aged over 75 remain fully exempt,” he said.
Aurangzeb also announced a downward revision of the proposed 18 percent sales tax on imported solar panels. The new rate is now 10 percent and will apply to just 46 percent of components, translating into a modest 4.6 percent increase in end-user prices. He warned against profiteering and hoarding, promising strict enforcement.
Regarding FBR reforms, he stated that arrests in tax cases under Rs50 million would now require a court-issued warrant, with oversight by a three-member FBR committee and mandatory appearance before a special judge within 24 hours.
Finally, Aurangzeb confirmed that most recommendations from the National Assembly’s Finance Committee had been adopted, including a simplified tax regime for micro and small e-commerce enterprises—ensuring ease of compliance while enhancing economic documentation.