Budget 2025: Salaried Citizens Get Relief, Senior Pensioners Enjoy Full Tax Waiver

ISLAMABAD – June 2025: “Federal Finance Minister Muhammad Aurangzeb has announced significant tax reforms and relief measures in the new federal budget, particularly for the salaried class and senior pensioners”. During his budget speech, the Minister outlined various updates aimed at easing the financial burden on low and middle-income earners while introducing new taxation policies for specific sectors, including agriculture and solar energy.

Pensioners Over 75 Exempted from Tax

In a major relief move, individuals aged 75 and above who are pensioners have been fully exempted from income tax, recognizing their financial limitations and contributions to society.

Relief for Salaried Individuals

The government has lowered the income tax for salaried employees with annual earnings ranging from Rs. 600,000 to Rs. 1.2 million. Previously taxed at 5%, their tax rate has now been cut down to just 1%, offering much-needed relief amid rising inflation and economic uncertainty.

Agriculture Income Tax Introduced

For the first time, the government has imposed a tax on agricultural income exceeding Rs. 10 million (1 crore) per year. This decision aims to bring high-income individuals in the agriculture sector into the tax net while protecting small farmers from additional burdens.

No Withholding Tax on Long-Term Residential Properties

Homes that have been in residential use for over 15 years will now be exempted from withholding tax, offering relief to long-term homeowners, especially retirees and fixed-income families.

Tax Reductions on Solar and Cotton

• The General Sales Tax (GST) on solar panels has been reduced from 18% to 10%, supporting renewable energy adoption across the country.
• Additionally, the tax on cotton has been completely abolished, aiming to promote the struggling textile and agriculture industries.

New Tax on Poultry Chicks

As part of new taxation efforts, a Rs. 10 tax per chick has been imposed on the poultry sector. This move may slightly impact prices but is intended to increase government revenue from commercial poultry businesses.

Boost for Private Businesses and BISP

Finance Minister Aurangzeb highlighted the government’s dedication to encouraging private businesses by introducing favorable policies. Furthermore, the Benazir Income Support Programme (BISP) has received a 20% increase in funding, aimed at expanding financial assistance to low-income families across Pakistan.

Legal Reforms in Tax Enforcement

To ensure fair enforcement of tax laws, it was announced that the Federal Board of Revenue (FBR) will no longer be able to arrest anyone for tax fraud under Rs. 50 million without prior approval from a committee. Arrested individuals must be presented before a court within 24 hours, upholding due process and reducing misuse of power.

Political Turmoil During Budget Speech

The National Assembly’s budget session witnessed intense demonstrations led by PTI. As the Finance Minister began his speech, PTI members shouted slogans and attempted to disrupt proceedings. A scuffle broke out when PTI’s Iqbal Afridi clashed with government members, prompting intervention by assembly security personnel.

Amid the commotion, Speaker Ayaz Sadiq encouraged the Finance Minister to proceed and wrap up the budget discussion.

Summary of Key Measures:

• Tax cut: Salaried class (Rs. 600k–1.2M) is now taxed at 1%, down from 5%
• Tax exemption: Pensioners over 75 years
• New tax: Agriculture income over Rs. 10 million
• Tax relief: No withholding tax on homes used for 15+ years
• Solar GST was reduced to 10%, and the Cotton tax was removed.
• Poultry Tax: Rs. 10 per chick
• BISP allocation increased by 20%
• FBR needs committee approval for arrests under Rs. 50 million fraud

These budgetary changes reflect the government’s focus on easing financial pressure on ordinary citizens while expanding the tax base through wealthier sectors. However, the new measures are expected to trigger debates, especially regarding their impact on agriculture and poultry prices .