Finance Minister Muhammad Aurangzeb on Monday revealed that the government will impose Rs36 billion in new taxes while easing restrictions initially planned to limit high-value purchases by individuals whose declared income doesn’t match their lifestyle.
The rule, originally meant to bar anyone from buying houses, cars, or making large transactions without a proper income trail, has been scaled down.
Now, it only applies to luxury items such as cars above 1,600cc, homes larger than one kanal in big cities (or two kanals in others), annual cash deposits over Rs100 million, and stock investments beyond Rs50 million.
This softening, reportedly made on the prime minister’s advice, has watered down the FBR’s broader enforcement drive, which the minister admitted was beyond its current capacity to implement effectively.
To generate revenue, three tax changes have been introduced: raising tax on the debt share of mutual funds held by companies from 25% to 29%, increasing tax on corporate earnings from government securities from 15% to 20%, and introducing a Rs10 federal excise duty on each day-old chick, expected to bring in Rs15 billion annually.
Other announcements included:
- No withholding tax on residential properties held for over 15 years.
- Retirement benefits like commutation and gratuity remain tax-free.
- Pensions above Rs10 million per year will now face a 5% tax, though those aged 75+ are exempt.
- Low-income earners making between Rs600,000 and Rs1.2 million annually will now be taxed at 1%, down from 2.5%.
- A 20-year housing loan scheme for low-income groups is being launched.
Regarding tax fraud, Aurangzeb clarified that arrests for fraud under Rs50 million can only happen with a court-issued warrant, after at least three notices, and only if there’s evidence of attempted escape or tampering with records.
Approval from a three-member FBR panel is also required, and the suspect must be presented to a special judge within 24 hours.