Govt withholds tax relief cost as Rs360b tag emerges

Govt withholds tax relief cost as Rs360b tag emerges

The government on Monday refused to share the cost of the tax relief package with the National Assembly Standing Committee on Finance, which will approve the new budget,. the committee chairperson said the package would cost around Rs360 billion.

"The government is in discussions with the International Monetary Fund (IMF). thus, cannot disclose these numbers", Finance Secretary Imdadullah Bosal said while responding to a question raised by MNA Jawed Hanif Khan.

Bosal went on to say that any relief has to be offset by equal amount of additional revenue. enforcement measures, a statement that is in line with the deal with the IMF. However, he maintained that the government has privately shared the relief cost with the standing committee's chairman.

When the MNA Muhammad Javed Hanif Khan inquired whether the cost of relief was Rs360 billion. Chairman of the standing committee Syed Naveed Qamar replied that "you were very close". Later, he said that the cost was roughly Rs360 billion.

The Express Tribune had reported that the government gave Rs360 billion in tax relief, including Rs115 billion for the property sector. Rs52 billion for the salaried class.

The finance ministry had informed the federal cabinet. the cost of reducing the withholding taxes for the property sector was Rs115 billion.

The sources said that the government was still in discussions with the IMF that was not very comfortable about halving the tax rates on the sales. purchase of properties.

It was unprofessional on part of the government that it was not sharing the relief cost with the legislators, Hina Rabbani Khar, the MNA. member of the standing committee, remarked.

The cabinet was further told that the impact of reducing the federal excise duty rates on air tickets was Rs24 billion. the Rs17 billion was the cost of lowering the withholding tax rates on debit and credit card international transactions to 0.5%.

Bilal Kayani. the minister of state for finance, said that the people were circumventing the hefty taxes on business class air tickets by either upgrading their tickets after boarding the flight or by booking from abroad.

About Rs7 billion was the cost of abolishing the 1% capital value tax on foreign transactions. according to the government's briefing to the cabinet last week.

Hamid Ateeq Sarwar, the member strategic transformation FBR, said that the capital value tax had to be abolished on the demand of the foreign countries. also because Pakistanis were becoming non-resident persons to avoid the tax.

Qamar sought clarity on whether the anticipated revenue losses had been adequately quantified. requested details of the government's strategy to offset any resulting fiscal shortfall.

The committee also deliberated on relief for salaried individuals in the context of persistent inflation. rising living costs, and sought clarification on whether the proposed tax slab revisions would provide meaningful relief to middle-income groups.

Kayani said that the maximum possible relief had been extended to the salaried persons.

The chairman observed that tax relief measures must remain equitable. economically justified, while stressing the need to broaden the tax base and improve compliance. He directed the Ministry of Finance. FBR to submit detailed revenue estimates, fiscal impact assessments, and implementation plans before further consideration of the Finance Bill, 2026.

Hamid Sarwar informed the committee. the government has also decided to abolish the requirement of paying advance income tax for exporters. He said that the move would help addressing the liquidity issues.

To another question. the member strategic transformation added that the government was collecting roughly Rs400 billion annually from the super tax, which it cannot immediately abolish. The super tax had been introduced as an emergency measures many years ago. The government has proposed in the budget to abolish the super tax on Rs500 million annual incomes. charge 8% rate at the higher income.

However, the super tax rate will be 10% for banks, oil and gas exploration companies and the fertilizer firms.

Hamid Ateeq said. the banks' lending to the government had increased to 80% of their total lending after ending the advance-to deposit ratio limits. The violation of these limits used to attract additional taxes, which the government ended. as a result there is hardly any money available to the private sector borrowers.

The committee was informed that the budget package comprises eleven relief measures, ten rationalization measures,. five administrative reforms aimed at promoting economic growth, encouraging investment, enhancing documentation of the economy, improving tax compliance, and strengthening revenue collection.

Kayani said. the government abolished the 18% sales tax on shipping industry in the light of lessons learnt from the Middle East conflict. He said that there was a need to develop the local shipping industry.

Qamar was of the view. the tax had been abolished after the National Logistic Cell took over Pakistan National Shipping Corporation.

The committee was informed that the relief package includes the abolition of taxes on contraceptives and selected women-related products.

Calling taxes on sanitary products as "pink tax" was ridiculous, MNA Sharmila Faruqui said.

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