Fuel and Vehicle Taxation Measures
Furthermore, a new fuel-based vehicle tax ranging from 1% to 3% has been introduced in order to subsidize electric vehicles. In addition, pensions exceeding Rs. 10 million annually will now be subject to a 5% tax rate.
Import and Property Related Tax Changes
In addition, a 10% sales tax has been approved on imported solar panels. However, the government has modified its enforcement rules related to economic transactions by non-filers. Specifically, restrictions will apply only if:
- Residential property is worth over Rs. 50 million
- Commercial property exceeds Rs. 100 million
- Car purchases are above Rs. 7 million
Moreover, non-filers are prohibited from maintaining savings accounts or withdrawing more than Rs. 100 million in cash annually. In addition, stock market investment restrictions apply only for investments exceeding Rs. 50 million per year.
Budgetary Allocations and Defence Spending
As a result, the largest budget allocation is Rs. 8.2 trillion for interest payments. Furthermore, defence spending is set at Rs. 2.55 trillion, excluding pensions and development and civil government expenses totaling Rs. 917 billion.
Tax Enforcement and Legal Provisions
Additionally, the Federal Board of Revenue (FBR) retains its arrest powers in sales tax fraud cases, although new safeguards have been introduced to protect taxpayers.
Government and Coalition Partner Agreements
Meanwhile, Prime Minister Shehbaz Sharif’s coalition partners supported the budget after securing exemptions for salaried individuals earning up to Rs. 100,000 per month.
Income Tax and Withholding Tax Changes
- The income tax rate on the debt portion of mutual funds issued to companies has increased from 25% to 29%.
- Additionally, income from government loans will now be taxed at 20%, up from 15%.
- Moreover, a withholding tax exemption was approved for individuals selling residential property held for at least 15 years.
Finance Act 2025 Effective Date
Finally, the Finance Act 2025 will come into effect from July 1, 2025.
