ISLAMABAD: The federal government has agreed to exempt income tax on annual salaries of up to Rs1.2 million, following demands from the Pakistan Peoples Party (PPP), paving the way for the party's support of the federal budget for the upcoming fiscal year.
PPP Chairperson Bilawal Bhutto Zardari confirmed his party’s full backing of the budget after successful negotiations with the government. Speaking on the floor of the National Assembly on Thursday, Bilawal said the government accepted key PPP proposals, including tax relief for salaried individuals and changes to controversial enforcement powers granted to the Federal Board of Revenue (FBR).
“The income tax on annual income of Rs1.2 million has been exempted on the PPP’s demand,” Bilawal stated, emphasizing that the relief will benefit salaried individuals earning up to Rs100,000 per month.
He further noted that the PPP had objected to proposed powers for the FBR to arrest individuals suspected of tax fraud. In response, the government agreed to restrict arrest powers strictly to cases involving sales tax forgery. “Even in those cases, no arrest will be made at the inquiry stage,” he said, adding that any arrests made will be bailable.
The move comes after PPP's firm resistance to what it had called "draconian powers" being handed to tax authorities. The Express Tribune reported earlier that the PPP had threatened to vote against the Finance Bill unless its reservations were addressed. However, Deputy Prime Minister Ishaq Dar played a key role in resolving the deadlock, assuring PPP leaders that new safeguards would be incorporated in the final Finance Act.
Dar confirmed that the revised provisions address concerns about the misuse of power by the FBR and include due process protections. “We have reached a consensus that respects taxpayers’ rights while maintaining the integrity of the tax system,” he told The Express Tribune.
Bilawal also announced that the government has agreed to reduce sales tax on solar panels, another demand put forward by the PPP to promote renewable energy and reduce electricity costs for the public.
In a further concession to the PPP, the federal government has increased the budget for the Benazir Income Support Programme (BISP) by 20%, raising the allocation to Rs716 billion for the next fiscal year.
The PPP's support secures the government's majority for passing the budget, while also enabling the party to deliver key relief measures to its voter base. The developments mark a rare moment of consensus amid ongoing political tensions in the country.
