National Assembly Approves Amended Finance Bill 2025: Key Tax Reforms, Digital Economy Measures, and Social Welfare Increases
ISLAMABAD – June 27, 2025:
The National Assembly of Pakistan on Thursday officially passed the amended Finance Bill 2025, marking the culmination of weeks of intense parliamentary debates, inter-party negotiations, and coalition consultations. The newly approved legislation brings forth a wide range of fiscal reforms, tax amendments, and economic policy shifts that aim to expand the tax net, promote digital economy regulation, and enhance transparency and accountability in tax administration budget.
Among the most notable developments in the amended bill is the decision to make arrests in tax fraud cases bailable, alongside the approval of key tax exemptions, new revenue measures, and adjustments to personal income tax slabs. The reforms were made possible after the ruling coalition partners reached a critical agreement addressing contentious clauses, especially those relating to the Federal Board of Revenue’s (FBR) arrest powers budget.
Arrest Powers in Tax Fraud Cases Modified After Coalitio Agreement
Deputy Prime Minister Ishaq Dar, speaking to reporters at the Parliament House, announced that the government had successfully negotiated with the Pakistan Peoples Party (PPP) over the controversial clause allowing arrests in tax fraud cases. According to the revised law, arrests related to sales tax fraud will no longer occur during the initial inquiry stage. Instead, detentions will be made only in proven cases involving fraudulent activities exceeding Rs50 million. Moreover, all such arrests will now be bailable.
Dar clarified that tax fraud would remain a cognizable offense, but procedural safeguards had been built into the law to prevent misuse. An oversight committee comprising representatives from the Customs, Inland Revenue, and Legal Departments must authorize arrests after proper investigation. Furthermore, arrested individuals must be presented before a magistrate within 24 hours, ensuring transparency and due process budget.
PPP’s Role in Shaping the Finance Bil
The Pakistan Peoples Party (PPP), a key coalition partner, played an instrumental role in reshaping major portions of the Finance Bill 2025. PPP Chairman Bilawal Bhutto Zardari took to the assembly floor to express his party’s support for the budget, explaining that several of their demands were accepted and incorporated into the final version of the bill budget.
Among the concessions secured by the PPP were:
-
An increase in the Benazir Income Support Programme (BISP) allocation by 20 percent.
-
A reduction in sales tax on solm budget.r panels from 18 percent to 10 percent.
-
A substantial increase i budget. the tax-free income threshold for salaried individuals from Rs600,000 to Rs1.2 million annually budget.
-
A 10 percent salary hike for government employees and a 7 percent rise in pensions budget.
-
Restoration of budget allocations for public universities in Sindh.
Bilawal also welcomed the rollback of controversial arrest powers initially proposed for the FBR. “We are satisfied that arrests will now only occur in proven cases and not during investigations,” he stated. He added that this shift was vital for restoring taxpayer confidence in state institutions budget.
Digital Economy Targeted in New Taxation Policy
As part of efforts to broaden the tax base and modernize the fiscal framework, the amended Finance Bill introduced a 2 percent tax on digital payment intermediaries involved in domestic e-commerce transactions. This move aims to tap into Pakistan’s rapidly growing online retail sector, ensuring that digital platforms contribute fairly to the national exchequer. budget.
The bill also empowers the federal government to exempt individuals, organizations, goods, or services from taxation through official notifications. Critics have raised concerns that such blanket powers could be used arbitrarily, but the government insists that these provisions will support economic flexibility and international agreements budget.
Key Tax Exemptions and Inclusion of NLC in Tax Net
Several tax exemptions were granted through the amended bill. Beneficiaries include:
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Beaconhouse National University
-
Federal Ziauddin University
-
Punjab Police Welfare Organisation, Lahore
Meanwhile, the National Logistics Corporation (NLC) has been brought into the tax net. The NLC will now be subject to a 3 percent tax on gross payments and lease revenues from toll collection operations. This tax will function as a minimum liability, reflecting the government’s intent to standardize tax application across sectors budget.
Opposition Voices Concerns on FATA Taxation
Federal Minister for Kashmir Affairs Amir Muqam voiced strong opposition to the imposition of a 10 percent General Sales Tax (GST) on the former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA). “The Prime Minister previously granted tax exemptions for these regions due to ongoing instability,” Muqam said during the assembly session.
Despite his arguments, the reduced GST rate was approved for these areas. Pakistan Tehreek-e-Insaf (PTI) members, including Ali Muhammad Khan and Iqbal Afridi, echoed similar sentiments, accusing the government of betraying its promises to the tribal regions. Former NA Speaker Asad Qaiser and Public Accounts Committee Chairman Junaid Akbar highlighted the lack of developmental spending and the imposition of unfair taxes on underprivileged populations in these areas budget.
Amendments to Tax Fraud Definitions and Procedures
Under the revised law, sales tax fraud has been clearly defined to include:
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Tampering with tax records
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Issuing fake tax invoices without goods delivery
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Deliberate misrepresentation in tax returns
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Manipulating or destroying tax documentation
Furthermore, corporate entities involved in tax fraud will be served three formal notices before any legal action is initiated. This ensures that genuine businesses are given a fair opportunity to comply before facing legal penalties.
Inquiries into sales tax fraud cases will no longer be held in secrecy. Individuals who cooperate during the inquiry process will not face arrest unless there is intent to destroy evidence or flee the country. These reforms are seen as an attempt to balance strict enforcement with due process protections budget.
Modernisation Measures to Combat Smuggling
To curb widespread smuggling and increase oversight, the Finance Bill 2025 authorizes the establishment of:
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Cargo Tracking Systems
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Electronic BLT Systems
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Digital Enforcement Stations
These measures will help customs and tax authorities monitor the movement of goods more effectively while reducing corruption and leakages in border trade.
New Income Tax Structure Introduced
The bill also includes a revised income tax regime for salaried individuals. Here is the breakdown:
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Income up to Rs600,000 annually: No tax
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Income from Rs600,001 to Rs1.2 million: 1% tax
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Income between Rs1.2 million and Rs2.2 million: Fixed tax of Rs6,000
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Income between Rs2.2 million and Rs3.2 million: Rs116,000
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Income between Rs3.2 million and Rs4.1 million: Rs346,000
The government argues that the revised tax structure is designed to ensure equity, with lower-income groups bearing minimal burden while higher earners contribute more budget.
Climate Support Levy Replaces Carbon Levy
In a significant rebranding move, the controversial Rs2.5 per litre Carbon Levy on petroleum products has now been renamed the Climate Support Levy. Officials claim the name change better reflects the levy’s purpose of financing environmental and climate-resilient infrastructure budget.
Asset Purchase Restrictions for Undocumented Individuals Relaxed
Originally, the budget proposed tight restrictions on property and vehicle purchases by individuals without a valid tax profile. However, after intervention by Prime Minister Shehbaz Sharif, the following exemptions were added:
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Residential property up to Rs50 million
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Commercial property up to Rs100 million
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Vehicles up to Rs7 million
Additionally, capital gains tax will not apply to properties sold after six years of ownership (if purchased before July 1, 2024). Properties held for personal use for 15 years or more will be exempt from withholding tax budget.
Operation Yalghar: CTD nabs RAW-linked terrorists planning to target mosque, railway station
Amendments in Salaries and Privileges of Parliamentarians Act
Members of the National Assembly Nosheen Iftikhar and Zahra Wadood Fatemi introduced changes to the Salaries and Privileges of Parliamentarians Act. The Finance Bill 2025 now transfers authority over salary and privilege decisions from the Secretariat to the House Committee budget.
Federal Ministers and Ministers of State will now draw salaries equivalent to Members of Parliament, a move aimed at reducing discrepancies in pay structures among federal officeholders budget.
Budgetary Allocations and Fiscal Targets
Finance Minister Muhammad Aurangzeb announced that the total outlay of the federal budget for fiscal year 2025-26 stands at Rs17.573 trillion. The economic roadmap aims to:
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Increase exports
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Enhance foreign exchange reserves
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Promote economic productivity
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Control fiscal deficits
Key targets and allocations include:
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FBR revenue collection target: Rs14.131 trillion (18.7% increase)
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Federal excise duty: Rs8.206 trillion
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Non-tax revenue: Rs5.147 trillion
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Mark-up payments: Rs8.207 trillion
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Public Sector Development Programme (PSDP): Rs1 trillion
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Annual Development Plans (ADPs): Rs4 trillion+
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Current federal expenditures: Rs16.286 trillion
Macroeconomic projections for FY 2025-26:
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GDP growth rate: 4.2%
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Inflation rate: 7.5%
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Fiscal deficit: 3.9% of GDP
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Primary surplus: 2.4% of GDP
Mixed Reactions Across Political Spectrum
While the ruling coalition celebrated the passage of the amended budget, opposition parties expressed dissatisfaction. PTI leaders, including Barrister Gohar Ali Khan and Asad Qaiser, called it a “64 percent deficit budget” and criticised what they called the government’s unjust tax regime, especially in the tribal regions. budget.
PPP’s Shazia Marri acknowledged that although the party’s major concerns were addressed, issues related to agriculture and South Punjab’s allocation remained unresolved. “Only 5 percent of the total allocation has been reserved for South Punjab, while our demand was 30 to 40 percent,” she said budget.
Conclusion: A Budget of Trade-Offs and Reforms
The Finance Bill 2025-26 presents a blend of progressive taxation, regulatory reforms, and economic modernisation. It seeks to expand the tax base through digital commerce, revise income tax structures for fairness, modernise customs enforcement, and protect lower-income citizens through enhanced social welfare budget.
Despite opposition criticism, the bill represents a negotiated compromise among Pakistan’s ruling coalition. It balances fiscal responsibility with social commitments, providing a framework for economic resilience in the coming fiscal year budget.
National Assembly Approves Amended Finance Bill 2025: Key Tax Reforms, Digital Economy Measures, and Social Welfare Increases
ISLAMABAD – June 27, 2025:
The National Assembly of Pakistan on Thursday officially passed the amended Finance Bill 2025, marking the culmination of weeks of intense parliamentary debates, inter-party negotiations, and coalition consultations. The newly approved legislation brings forth a wide range of fiscal reforms, tax amendments, and economic policy shifts that aim to expand the tax net, promote digital economy regulation, and enhance transparency and accountability in tax administration budget.
Among the most notable developments in the amended bill is the decision to make arrests in tax fraud cases bailable, alongside the approval of key tax exemptions, new revenue measures, and adjustments to personal income tax slabs. The reforms were made possible after the ruling coalition partners reached a critical agreement addressing contentious clauses, especially those relating to the Federal Board of Revenue’s (FBR) arrest powers budget.
Arrest Powers in Tax Fraud Cases Modified After Coalition Agreement
Deputy Prime Minister Ishaq Dar, speaking to reporters at the Parliament House, announced that the government had successfully negotiated with the Pakistan Peoples Party (PPP) over the controversial clause allowing arrests in tax fraud cases. According to the revised law, arrests related to sales tax fraud will no longer occur during the initial inquiry stage. Instead, detentions will be made only in proven cases involving fraudulent activities exceeding Rs50 million. Moreover, all such arrests will now be bailable budget.
Dar clarified that tax fraud would remain a cognizable offense, but procedural safeguards had been built into the law to prevent misuse. An oversight committee comprising representatives from the Customs, Inland Revenue, and Legal Departments must authorize arrests after proper investigation. Furthermore, arrested individuals must be presented before a magistrate within 24 hours, ensuring transparency and due process budget.
PPP’s Role in Shaping the Finance Bil
The Pakistan Peoples Party (PPP), a key coalition partner, played an instrumental role in reshaping major portions of the Finance Bill 2025. PPP Chairman Bilawal Bhutto Zardari took to the assembly floor to express his party’s support for the budget, explaining that several of their demands were accepted and incorporated into the final version of the bill.
Among the concessions secured by the PPP were:
-
An increase in the Benazir Income Support Programme (BISP) allocation by 20 percent.
-
A reduction in sales tax on solar panels from 18 percent to 10 percent budget.
-
A substantial increase in the tax-free income threshold for salaried individuals from Rs600,000 to Rs1.2 million annually budget.
-
A 10 percent salary hike for government employees and a 7 percent rise in pensions budget.
-
Restoration of budget allocations for public universities in Sindh budget.
Bilawal also welcomed the rollback of controversial arrest powers initially proposed for the FBR. “We are satisfied that arrests will now only occur in proven cases and not during investigations,” he stated. He added that this shift was vital for restoring taxpayer confidence in state institutions budget.
Digital Economy Targeted in New Taxation Policy
As part of efforts to broaden the tax base and modernize the fiscal framework, the amended Finance Bill introduced a 2 percent tax on digital payment intermediaries involved in domestic e-commerce transactions. This move aims to tap into Pakistan’s rapidly growing online retail sector, ensuring that digital platforms contribute fairly to the national exchequer budget.
The bill also empowers the federal government to exempt individuals, organizations, goods, or services from taxation through official notifications. Critics have raised concerns that such blanket powers could be used arbitrarily, but the government insists that these provisions will support economic flexibility and international agreements budget.
Key Tax Exemptions and Inclusion of NLC in Tax Net
Several tax exemptions were granted through the amended bill. Beneficiaries include:
-
Beaconhouse National University budget.
-
Federal Ziauddin University budget.
-
Punjab Police Welfare Organisation, Lahore budget.
Meanwhile, the National Logistics Corporation (NLC) has been brought into the tax net. The NLC will now be subject to a 3 percent tax on gross payments and lease revenues from toll collection operations. This tax will function as a minimum liability, reflecting the government’s intent to standardize tax application across sectors budget.
Opposition Voices Concerns on FATA Taxation
Federal Minister for Kashmir Affairs Amir Muqam voiced strong opposition to the imposition of a 10 percent General Sales Tax (GST) on the former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA). “The Prime Minister previously granted tax exemptions for these regions due to ongoing instability,” Muqam said during the assembly session budget.
Despite his arguments, the reduced GST rate was approved for these areas. Pakistan Tehreek-e-Insaf (PTI) members, including Ali Muhammad Khan and Iqbal Afridi, echoed similar sentiments, accusing the government of betraying its promises to the tribal regions. Former NA Speaker Asad Qaiser and Public Accounts Committee Chairman Junaid Akbar highlighted the lack of developmental spending and the imposition of unfair taxes on underprivileged populations in these areas budget.
National Assembly Approves Amended Finance Bill 2025: Key Tax Reforms, Digital Economy Measures, and Social Welfare Increases
ISLAMABAD – June 27, 2025:
The National Assembly of Pakistan on Thursday officially passed the amended Finance Bill 2025, marking the culmination of weeks of intense parliamentary debates, inter-party negotiations, and coalition consultations. The newly approved legislation brings forth a wide range of fiscal reforms, tax amendments, and economic policy shifts that aim to expand the tax net, promote digital economy regulation, and enhance transparency and accountability in tax administration budget.
Among the most notable developments in the amended bill is the decision to make arrests in tax fraud cases bailable, alongside the approval of key tax exemptions, new revenue measures, and adjustments to personal income tax slabs. The reforms were made possible after the ruling coalition partners reached a critical agreement addressing contentious clauses, especially those relating to the Federal Board of Revenue’s (FBR) arrest powers.
Arrest Powers in Tax Fraud Cases Modified After Coalition Agreement
Deputy Prime Minister Ishaq Dar, speaking to reporters at the Parliament House, announced that the government had successfully negotiated with the Pakistan Peoples Party (PPP) over the controversial clause allowing arrests in tax fraud cases. According to the revised law, arrests related to sales tax fraud will no longer occur during the initial inquiry stage. Instead, detentions will be made only in proven cases involving fraudulent activities exceeding Rs50 million. Moreover, all such arrests will now be bailable budget.
Dar clarified that tax fraud would remain a cognizable offense, but procedural safeguards had been built into the law to prevent misuse. An oversight committee comprising representatives from the Customs, Inland Revenue, and Legal Departments must authorize arrests after proper investigation. Furthermore, arrested individuals must be presented before a magistrate within 24 hours, ensuring transparency and due process.
