Tough Fiscal Measures Expected in Upcoming Budget: FBR Chairman

ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood stated on Wednesday that the forthcoming federal budget for 2025-26 will involve stringent measures, with no anticipated sales tax exemptions or decreases, except for potential relief for salaried individuals.

The FBR chairman made these remarks during a session of the Standing Committee on Finance and Revenue at Parliament House, Islamabad. Syed Naveed Qamar, MNA, presided over the meeting.

Finance Minister Muhammad Aurangzeb, participating remotely from Karachi, also verified that providing tax relief to salaried individuals is being considered in the upcoming budget for 2025-26.

Salaried Individuals as Major Contributors

In the first half of fiscal year 2025, Rs265.745 billion was collected in Withholding Tax (WHT), with salaried individuals being a primary contributor.

Sources indicate that the FBR has been working on substantial tax relief measures for the salaried class in the upcoming budget.

Responding to the dairy sector’s proposal to reduce sales tax from 18% to 5%, the FBR chairman communicated to the committee that the budget would be “tough.”

While the proposal is under analysis, the chairman noted the constraints of the International Monetary Fund (IMF) program, indicating that sales tax reductions are not feasible under the current agreement.

“We are facing difficulties in meeting revenue collection targets,” the FBR chairman stated. He added that economic forecasts, including GDP growth, import levels, inflation rates, and expansion in large-scale manufacturing, which were initially used to set the tax collection target for 2024-25, have since been revised.

The FBR chairman mentioned the establishment of a tax policy unit at the Ministry of Finance. However, he noted that the FBR would review this year’s budget until the tax policy unit is fully operational.

The Finance Committee chairman urged the FBR chairman to consider reducing sales tax on milk and offset the revenue shortfall from other sectors. He suggested, “The FBR should convince the IMF that the reduction in sales tax on this essential item could be balanced by alternative measures.”

The committee also examined “The Income Tax (Amendment) Bill, 2024” and recommended its passage by the National Assembly.

Additionally, the committee reviewed “The Corporate Social Responsibility Bill, 2025,” a private member’s bill introduced by Dr. Nafisa Shah, MNA. Members lauded the initiative and expressed unanimous support for the proposed legislation. A Sub-Committee was formed to further analyze the bill and engage relevant stakeholders.

Mirza Ikhtiar Baig, MNA, will convene the Sub-Committee, with Rana Iradat Sharif Khan, Arshad Abdullah Vohra, and Muhammad Ali Sarfraz, MNA, as members.

The committee addressed the “Non-implementation of Minimum Wages Announced by the Federal Government in its Departments,” an issue raised by Syed Agha Rafiullah, MNA. Agha Rafiullah pointed out that both the private sector and several government departments are not adhering to the minimum wage policy. The chairman instructed the Additional Secretary Finance to ensure compliance across all departments.

The mover was advised to submit evidence to the finance secretary for appropriate action, and the matter was deferred to the next meeting.

The committee also addressed the “Inquiry Regarding the Constitutional Validity and Potentially Maligning Provisions in Section 99D of the Income Tax Ordinance, 2001,” raised by Syed Hafeezuddin, MNA.

The president of Zarai Taraqiati Bank Limited (ZTBL) provided a detailed overview of the bank’s performance and operations. The committee noted that the bank appeared to be prioritizing profits over supporting agriculturalists and farmers.

The chair directed the bank president to broaden the loan base and simplify the process. He suggested introducing a credit card with suitable credit limits for farmers and offering repayment incentives through easy installments.

The committee requested a province-wise breakdown of the bank’s loan distributions and voiced concerns regarding the potential privatization of the bank.

The committee approved the minutes from its previous meeting.

The meeting saw attendance from various MNAs, including Rana Iradat Sharif Khan, Zeb Jaffar, and the Finance Minister Muhammad Aurangzeb, chairman FBR, along with other senior ministry and department officials.