ISLAMABAD — Finance Minister Muhammad Aurangzeb on Saturday formally rolled out the proposed federal budget for the upcoming fiscal year, describing it as a calculated, growth-oriented roadmap designed to transition Pakistan from economic stabilization to long-term industrial and export-led expansion. Flanked by State Minister for Finance Bilal Azhar Kiani, Information Minister Attaullah Tarar, and Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial during a high-profile media briefing, the finance minister declared that macro-stability remains the fundamental baseline for domestic and foreign investment.
The cornerstone of the newly unveiled fiscal policy is a series of structural incentives tailored for the corporate, manufacturing, and export sectors. Under directives from Prime Minister Shehbaz Sharif, the government has proposed completely abolishing the super tax for businesses generating annual revenues between Rs150 million and Rs500 million. For corporate entities earning above the Rs500 million threshold, the super tax rate will drop from 10% to 8%. Furthermore, the super tax and advance taxes have been completely eliminated for all registered exporters to bridge the country’s trade deficit.
To financially anchor this policy shift, the government allocated an additional subsidy of Rs70 billion to significantly scale up the Export Refinance Scheme (EFS). For the high-performing Information Technology (IT) sector, freelancers, and members of PASHA, the government maintained the 0.25% Final Tax Regime (FTR) to sustain the momentum driving IT exports toward a projected target of $4.5 billion.
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| Fiscal Element | Previous / Proposed Rate | Targeted Segment |
+------------------------------+---------------------------+------------------------+
| Super Tax (Rs150m - Rs500m) | Completely Abolished | Mid-sized Corporations |
| Super Tax (Above Rs500m) | Reduced from 10% to 8% | Large Scale Industry |
| Final Tax Regime (FTR) | Maintained at 0.25% | IT, Freelancers, PASHA |
| Salaried Class Tax Slab 1 | Reduced from 5% to 1% | Lower-Income Salaried |
| Salaried Class Tax Slab 2 | Reduced from 15% to 13% | Mid-Income Salaried |
+------------------------------+---------------------------+------------------------+
In a major structural shift expected to remain in place for the next three years, provincial development allocations under the National Finance Commission (NFC) framework will face a strategic freeze. The reallocated provincial resources are being explicitly diverted to support the national defense budget and critical federal security infrastructure. Addressing administrative duplication, Aurangzeb confirmed that the Prime Minister has made a principal decision to merge the Board of Investment (BOI) and the Special Investment Facilitation Council (SIFC) into a unified, one-window operation for foreign investors as part of a wider rightsizing exercise across federal ministries.
Acknowledging that the salaried class carries a disproportionate share of the direct taxation burden, State Minister Bilal Azhar Kiani detailed substantial relief measures for lower-to-middle income brackets. Tax slabs previously positioned at 5% and 15% have been reduced to 1% and 13%, respectively, with maximum relief targeted at citizens earning up to Rs2.2 million annually. For government employees and pensioners, a 7% increase was announced, which the finance minister termed satisfactory when balanced against the new tax reliefs and prevailing inflation indices.
The government is transitioning revenue operations into an automated, AI-driven model to minimize human intervention and eliminate corrupt practices. FBR Chairman Rashid Mahmood Langrial noted that while the Benazir Income Support Programme (BISP) will continue to shield vulnerable populations outside active economic channels, sustainable poverty reduction will only follow export growth. To widen the domestic tax net, a specialized retailers’ scheme alongside a fixed tax model for small traders and shopkeepers has been introduced.
For the agricultural sector, which saw credit financing surge by 15% year-on-year to cross Rs2 trillion, the budget eliminates all customs and regulatory duties on essential imported machinery like combined harvesters, tractors, and centrifugal pumps. Parallel incentives were proposed to subsidize locally manufactured small electric vehicles and e-bikes, while heavy regulatory barriers were introduced for luxury EV imports.
In a poignant closing note, Finance Minister Aurangzeb sounded an alarm regarding Pakistan’s rapid population growth, characterizing it as an existential threat to food security, learning poverty, and child-stunting rates. To aggressively address this crisis, the budget completely abolishes all domestic taxes on contraceptives and sanitary pads. The minister stated that population management drivers must be systematically integrated and modified in the upcoming National Finance Commission award allocation.
