Govt hints at tax relief for salaried class in upcoming budget

Finance Minister Muhammad Aurangzeb has indicated a potential relief in taxes for the salaried class. While speaking at an event, he stated that the federal budget for fiscal year (FY) 2025-26 will reduce the strain on salaried individuals.

The federal budget for the coming fiscal year will be presented on June 10. It merits a mention that the federal government was to announce the budget earlier. However, authorities chose to delay the announcement instead as discussions between Islamabad and the International Monetary Fund (IMF) remained inconclusive. 

As per reports, the government is attempting to “reduce the tax burden” on the salaried class. The finance minister indicated that Islamabad was working towards simplifying processes surrounding the filing of taxes for the salaried class. If taxes are slashed, it could increase the disposable income of households, resulting in an improvement in the purchasing power of households.

Moreover, he outlined the difficulties caused by automatic deductions in the salaries of the working class. The finance minister also highlighted how efforts are underway to digitise the Federal Board of Revenue’s (FBR) operations.

If successful, it could minimise the intervention of officials, thereby boosting transparency and faith in the tax collection process. Reports indicate that Islamabad is attempting to reform pension plans and intends to modernise debt management systems.

The finance minister emphasised the government's commitment to supporting the armed forces, framing it as a national necessity rather than merely a military obligation. However, he highlighted how “no concrete announcement has been made regarding salary revisions”, leaving analysts wondering if civil-military personnel will witness increments in their pay for FY 2025-26. 

Speaking at the same event, the finance minister revealed how international players have started to recognise the trajectory Pakistan’s economy is on, with the speed of recovery leaving many stunned. 

"The world is satisfied with Pakistan’s macroeconomic stability,” he proclaimed, suggesting that all macroeconomic indicators are moving in the right direction. He revealed how 24 state-owned enterprises had been passed off to the Privatisation Commission, which could result in cutting off loss-making institutions while simultaneously generating revenue for the federal government.

According to reports, lawmakers in Islamabad are likely to introduce reforms that will transform the energy sector and the system for taxation, improving Pakistan's fiscal position. The energy sector has already begun to undergo reforms, notably the repurposing of excess electricity for crypto mining and AI data centres.

Pakistan has reportedly received positive feedback regarding the direction of its economy during meetings with the United States (US) and the United Kingdom (UK) based investors.