The government on Monday declined to share the cost of the tax relief package with the National Assembly Standing Committee on Finance, which is tasked with approving the new budget. However, the committee chairperson indicated that the package would cost approximately Rs360 billion.
Finance Secretary's Statement
Finance Secretary Imdadullah Bosal stated that the government is in discussions with the International Monetary Fund (IMF) and therefore cannot disclose these figures. He was responding to a question raised by MNA Jawed Hanif Khan. Bosal further explained that any relief must be offset by an equal amount of additional revenue and enforcement measures, a condition aligned with the IMF agreement. However, he noted that the government had privately shared the relief cost with the standing committee's chairman.
Chairman's Confirmation
When MNA Muhammad Javed Hanif Khan inquired whether the relief cost was Rs360 billion, Chairman Syed Naveed Qamar replied that he was very close. Later, Qamar confirmed that the cost was roughly Rs360 billion.
The Express Tribune had previously reported that the government provided Rs360 billion in tax relief, including Rs115 billion for the property sector and Rs52 billion for the salaried class. The finance ministry had informed the federal cabinet that reducing withholding taxes for the property sector would cost Rs115 billion.
IMF Concerns and Criticism
Sources revealed that the government is still in talks with the IMF, which is uncomfortable with halving tax rates on property sales and purchases. MNA Hina Rabbani Khar, a member of the standing committee, remarked that it was unprofessional for the government not to share the relief cost with legislators.
The cabinet was also informed that reducing federal excise duty on air tickets would cost Rs24 billion, while lowering withholding tax rates on international debit and credit card transactions to 0.5% would cost Rs17 billion. Minister of State for Finance Bilal Kayani noted that people were circumventing high taxes on business class air tickets by upgrading after boarding or booking from abroad.
Additional Relief Measures
Abolishing the 1% capital value tax on foreign transactions would cost about Rs7 billion, according to the government's briefing to the cabinet. Hamid Ateeq Sarwar, member strategic transformation FBR, stated that the tax was abolished at the demand of foreign countries and because Pakistanis were becoming non-resident persons to avoid it.
Committee Deliberations
Chairman Qamar sought clarity on whether anticipated revenue losses had been adequately quantified and requested details of the government's strategy to offset any fiscal shortfall. The committee also discussed relief for salaried individuals amid persistent inflation and rising living costs, seeking clarification on whether proposed tax slab revisions would provide meaningful relief to middle-income groups. Kayani said that maximum possible relief had been extended to salaried persons.
Qamar observed that tax relief measures must remain equitable and economically justified, stressing the need to broaden the tax base and improve compliance. He directed the Ministry of Finance and FBR to submit detailed revenue estimates, fiscal impact assessments, and implementation plans before further consideration of the Finance Bill, 2026.
Exporters and Super Tax
Hamid Sarwar informed the committee that the government decided to abolish the requirement of paying advance income tax for exporters, a move that would help address liquidity issues. On another question, he added that the government collects roughly Rs400 billion annually from the super tax, which cannot be immediately abolished. The super tax was introduced as an emergency measure years ago.
The government has proposed in the budget to abolish the super tax on incomes up to Rs500 million and charge an 8% rate on higher incomes. However, for banks, oil and gas exploration companies, and fertilizer firms, the super tax rate will remain at 10%.
Bank Lending Concerns
Hamid Ateeq said that banks' lending to the government had increased to 80% of their total lending after ending advance-to-deposit ratio limits. Violating these limits used to attract additional taxes, but the government ended that, resulting in hardly any money available to private sector borrowers.
The committee was informed that the budget package comprises eleven relief measures, ten rationalization measures, and five administrative reforms aimed at promoting economic growth, encouraging investment, enhancing documentation, improving tax compliance, and strengthening revenue collection.
Shipping and Women's Products
Kayani said that the government abolished the 18% sales tax on the shipping industry in light of lessons from the Middle East conflict, emphasizing the need to develop the local shipping industry. Qamar opined that the tax was abolished after the National Logistic Cell took over Pakistan National Shipping Corporation.
The committee was informed that the relief package includes the abolition of taxes on contraceptives and selected women-related products. MNA Sharmila Faruqui called taxing sanitary products a ridiculous pink tax.
