The federal government, in its Budget 2025-26, presented by Finance Minister Muhammad Aurangzeb, has announced a series of tax relief measures aimed at supporting various sectors of the economy and providing relief to the public.
The budget focuses on easing the tax burden on the corporate sector, salaried individuals, and pensioners while introducing reforms in property taxes, customs duties, and pensions. Below is a detailed breakdown of the key relief measures announced:
Corporate Sector Relief
Reduction in Super Tax
- 0.5% cut for companies with annual income between Rs 200 million and Rs 500 million.
- Withholding Tax Reduction on Property Purchases:
- First slab: from 4% to 2.5%.
- Second slab: from 3.5% to 2%.
- Third slab: from 3% to 1.5%.
- Abolishment of Federal Excise Duty (FED):
- 7% FED on transfer of commercial properties, plots, and houses abolished.
- Promotion of Mortgage Financing:
- Tax credits offered for houses up to 10 marlas and flats up to 2,000 sq. ft.
Salaried Class Relief
Income Tax Cuts:
- Up to 4% reduction across various slabs to benefit lower and middle-income salaried individuals.
Customs Duties Relief
- Reduction in Additional Customs Duty (ACD):
- From 4% to 2% on 518 tariff lines under the 15% slab.
- From 6% to 4% on 2,166 tariff lines under the 20% slab.
- From 7% to 6% on 468 tariff lines above the 20% slab.
Pensioners Relief
- Exemption for Low & Middle-Income Pensioners:
- Pensioners under 70 years receiving over Rs 10 million annually to be taxed at 5%.
- Low and middle-income pensioners remain exempted.
Pension Reforms:
- Family pension duration is limited to 10 years after the spouse’s death.
- Multiple pensions abolished.
- Re-employed retirees must choose between a pension and a salary.
Property Sector Relief
- Stamp Duty Reduction:
- In Islamabad, the stamp duty on property purchases was cut from 4% to 1%.
