Karachi, April 30, 2025 – The Karachi Tax Bar Association (KTBA) has formally submitted its comprehensive set of tax proposals for the upcoming Budget 2025–26, emphasizing the need for a balanced, efficient, and taxpayer-friendly tax regime.
The proposals, addressed to Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial, focus on reforms in both direct and indirect taxation and advocate for systemic improvements that protect taxpayer rights while promoting revenue growth.
The KTBA highlighted key concerns and solutions under the Budget 2025–26, particularly urging reforms to address persistent flaws in Pakistan’s tax appellate structure, simplify the digital tax filing system (IRIS), and introduce more equitable tax policies. The association’s submission builds upon its earlier recommendations and reflects ongoing engagement with tax authorities.
Reforming the Appellate System
One of the KTBA’s primary suggestions for the budget is a comprehensive review of recent amendments to the appellate structure under the Income Tax Ordinance, 2001 and the Sales Tax Act, 1990. These changes, introduced in May 2024 to improve efficiency through pecuniary jurisdiction and time-bound procedures, have reportedly created more confusion and delays. The KTBA warns that these changes have added to taxpayers’ burden, leading to unnecessary litigation and dissatisfaction.
The association proposes a review that aligns legal frameworks with practical realities. Furthermore, KTBA recommends introducing a settlement scheme to resolve pending tax disputes—requiring only eligible tax payments and waiving penalties and ineligible taxes—to restore confidence in the system.
Enhancing Transparency and Fairness
To ensure greater transparency in tax correspondence, the KTBA has proposed expanding the use of system-generated barcodes, already in use under the Income Tax framework, to Sales Tax notices. This step is intended to prevent fake notices and ensure traceable, verifiable communication between the FBR and taxpayers.
Relief Measures for Individual Taxpayers
In light of inflation and growing financial strain on low- and middle-income earners, the KTBA has urged the government to revise the basic income tax exemption threshold in the Budget 2025–26 from Rs. 600,000 to Rs. 1,000,000. The association also called for a reduction in the top tax slab of 45% for incomes exceeding Rs. 5.6 million, branding it as regressive and disproportionate when compared to corporate tax rates.
Support for Businesses and System Improvements
The KTBA also recommends lowering the minimum turnover tax (Section 113) from 1.25% to 0.75%, especially for small businesses, startups, and loss-making entities. This move, they argue, will ease financial pressures and promote entrepreneurship.
Moreover, the association has compiled a detailed annex (Annex C) outlining glitches in the IRIS system along with suggestions to make it more accessible and user-friendly.
In conclusion, the KTBA expressed its willingness to engage in detailed discussions with the FBR to elaborate on its proposals. The association emphasized that meaningful tax reform in the budget requires cooperation, transparency, and a commitment to fairness.
The KTBA reiterated its belief that a just and taxpayer-friendly regime is not only good policy but essential for long-term economic sustainability—and that Budget 2025–26 presents an important opportunity to achieve that goal.