Finance minister vows to shift tax burden away from salaried class, other documented sectors

Finance Minister Muhammad Aurangzeb has assured that the upcoming budget will offer some relief to the salaried class by shifting the tax focus towards sectors that operate outside of the formal economy. According to reports, in meetings held on Tuesday as part of pre-budget consultations, the finance minister outlined how this shift would come through stronger digitisation efforts and a move to limit cash transactions.

Reports indicate that over the past few days, the finance team met with a multitude of officials from banks, financial institutions, regulators, and representatives from industries like steel and ceramics. These meetings gathered input on policy decisions for the next federal budget, and as per reports, much of the focus remained on finding ways to capture undocumented economic activity.

A set of proposals was discussed that could reshape how cash is used in Pakistan’s economy. Some of the ideas included taxing large cash transactions, which incentivises digital payment methods, or, more seriously, even banning cash altogether in certain sectors that the Federal Board of Revenue (FBR) will identify. 

Karandaaz, Pakistan Revenue Automation Limited, and banks are all expected to play a part in supporting this effort. If implemented, it would allow for transactions to be documented in greater detail, reducing instances of tax evasion and money laundering.

Another meeting zeroed in on the push toward digital payments. Authorities intend to expand access to these services, especially for people who are currently left out. 

According to analysts, those left out of the digitisation process include small retailers and communities that still depend heavily on cash. Stakeholders said this transition can’t happen unless it becomes cheaper and easier to adopt digital options. 

Reports indicate that lowering costs for businesses that accept digital payments was described as a priority in discussions. As it stands, consumer transactions made via digital means are subject to lower General Sales Tax (GST) charges, which already makes cashless payments an attractive option. 

As per reports, the federal government also wants to make digital payment systems more compatible with one another. Platforms like Raast, which allow instant payments between banks, were outlined as a key building block to a system where people have more freedom to choose how they pay and who they bank with.

Officials reportedly stressed the importance of making digital payments not just available but attractive. That means changing how incentives are structured so that cash no longer seems like the simpler option. The overall goal is to level the playing field between digital and cash-based transactions.

The finance minister made it clear that moving away from cash is no longer just a policy goal, as he labelled it a necessary step for economic stability and long-term growth. In his words, building an inclusive and easy-to-use digital payments system is essential, and it needs to happen with speed and coordination.