ISLAMABAD: Finance Minister Muhammad Aurangzeb announced on Monday that the government is withdrawing sales tax and duty exemptions on imported cotton and yarn in a move to support local cotton growers and revive Pakistan’s struggling textile sector.
Speaking during his concluding remarks on the Finance Bill 2024-25 in the National Assembly, Aurangzeb said that while previous export facilitation schemes allowed duty- and tax-free raw material imports, recent data showed that these exemptions widened the price gap between imported and locally produced cotton — hurting domestic farmers.
“The removal of exemptions will increase local production, rejuvenate spinning mills, and save valuable foreign exchange,” he said.
To offset revenue losses from the reduced solar panel sales tax, he announced Rs36 billion in new tax measures for 2025-26. He emphasized that the government’s broader fiscal policy is centered on expanding the tax net, enhancing compliance, and promoting inclusive growth without overburdening current taxpayers.
He outlined various reforms including digitalisation, environmental taxation, and industry-friendly tariff rationalisation. A key announcement was the allocation of Rs716 billion to the Benazir Income Support Programme, up from Rs592 billion, benefiting nearly 10 million families.
Aurangzeb unveiled a flagship agricultural credit programme offering unsecured digital loans of up to Rs1 million for small farmers, and an Electronic Warehouse Receipt System to improve grain marketing. A 20-year low-income housing finance scheme is also in the works.
On pensions, he clarified that only annual pensions above Rs10 million will be taxed, with full exemptions for those over 75. The 18% sales tax on solar panels was revised to 10%, applicable only to 46% of components.
He reassured the house that arrest powers under tax fraud provisions had been revised: cases below Rs50 million now require a warrant, and oversight will be ensured via an FBR committee.
Acknowledging input from parliamentarians, he thanked opposition leaders and coalition partners. “National consensus is essential for economic recovery. Let’s build a better future for Pakistan together,” he concluded.
