FM Cuts Tax, GST in FY25-26 Budget Revision

Islamabad, June 21, 2025 — Finance Minister Muhammad Aurangzeb on Saturday unveiled sweeping revisions to the FY2025-26 federal budget, slashing the income tax rate for the salaried class earning Rs600,000–Rs1.2 million annually to 1% from the proposed 2.5%—a steep drop from FY2024-25’s 5%—and reducing the General Sales Tax (GST) on imported solar panels from 18% to 10%, responding to public outcry and lawmaker pressure during the Senate budget debate. Aurangzeb hailed this as a “practical and symbolic recognition” of the low- and middle-income workers bearing inflation and tax burdens, the economy’s backbone.

Yet, salaried workers and tax experts dismiss the relief as inadequate, citing inflation-outpaced income thresholds and bracket creep for higher earners with limited deductions. Federal employees will see a 10% salary hike, and pensions a 7% increase, while Aurangzeb boasted fiscal discipline, with federal expenditure up just 1.9% year-on-year and no mini-budget in FY24-25. The 18% GST on solar panels, pitched to protect local industry, sparked industry backlash, prompting the 10% cut—applying to 46% of components—with Aurangzeb warning of legal action against profiteering and hoarding amid price hikes in Lahore and Karachi.

He estimated a 4.6% price rise for solar panels, far below initial fears, but concerns linger over renewable energy taxation and clean energy commitment. The Senate session persists, scrutinizing the finance bill for final approval.

Web context highlights Pakistan’s energy crisis (e.g., 20% tariff hikes, web ID: 0), while X posts show mixed reactions—some welcome relief, others decry insufficient action. Critically, the narrative of “responsive governance” may mask policy inconsistency—web data points to tax base issues, and X sentiment suggests distrust in sustainable reforms, hinting at public discontent.