Govt Exempts Income Tax on Rs1.2 Million Annual Salary

The federal government has agreed to exempt income tax on annual salaries up to Rs1.2 million, following demands made by the Pakistan Peoples Party (PPP) during federal budget talks, PPP Chairperson Bilawal Bhutto Zardari announced on Thursday.

Speaking on the floor of the National Assembly, Bilawal confirmed that his party would fully support the federal budget 2025–26 after several key demands were accepted, including the income tax exemption for salaried individuals earning Rs100,000 per month and the reduction of sales tax on solar panels.

Bilawal stated that the PPP had strongly advocated for the income tax exemption threshold to be raised. “We demanded no tax on income up to Rs1 million, and now the government has agreed to exempt income up to Rs1.2 million per annum,” he said.

He also shared that the government addressed the party’s concerns about granting arrest powers to the Federal Board of Revenue (FBR). According to the new understanding, arrest powers will be strictly limited to sales tax forgery, and no arrest will be made during the inquiry stage. Furthermore, tax fraud will be considered a bailable offense, he added.

Earlier, media reports indicated that the PPP was unwilling to support the budget due to the proposed FBR arrest powers. However, Deputy Prime Minister Ishaq Dar reportedly played a pivotal role in convincing the party to withdraw its objections.

Dar later stated that new legal safeguards had been introduced in the Finance Act to accommodate the PPP’s concerns.

Bilawal also noted that the Benazir Income Support Programme (BISP) budget was increased by 20% on PPP’s demand, bringing the total allocation to Rs716 billion for the upcoming fiscal year.

The income tax exemption and the enhanced BISP allocation are being seen as major wins for the PPP, which now throws its weight behind the coalition government’s budget proposal.