ISLAMABAD: The Federal Board of Revenue (FBR) has reversed the proposed tax relief for low-income salaried persons, according to a statement made during a session of the National Assembly’s Standing Committee on Finance and Revenue.
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A considerable portion of the committee’s recent proceedings was dominated by discussions around conflicting tax rates for low-income salaried persons. Although Finance Minister Muhammad Aurangzeb announced a 2.5% tax rate on annual incomes between Rs600,001 and Rs1.2 million in his budget speech, the Finance Bill 2025 listed the rate as 1%.
Clarifying the discrepancy, FBR Chairman Rashid Mahmood Langrial informed the committee that the federal cabinet had decided to reverse the proposed tax relief for low-income salaried persons, effectively reinstating the higher tax burden.
The newly appointed Minister of State for Finance, Bilal Azhar Kayani, defended the cabinet’s decision. He argued that the adjustment was in line with updated projections, including a 10% salary increase for government employees, up from the earlier estimate of 6%.
However, members of the committee expressed concern that this salary increase would benefit only public sector employees. They noted that the revised tax policy would disproportionately affect private sector earners, who are not covered by the government’s pay hike.
Committee Chairman Naveed Qamar questioned the rationale behind withdrawing relief, highlighting the added financial strain on lower-income earners in the private sector.
Elsewhere in the session, the panel was informed of the federal government’s decision to increase the cash withdrawal limit from Rs50,000 to Rs75,000 for applying the withholding tax on cash withdrawals by non-filers.
Committee Chairman Naveed Qamar had initially suggested increasing the limit to Rs100,000, but both the FBR and the committee agreed to fix it at Rs75,000. The revised limit is intended to strike a balance between tax enforcement and public convenience.