FBR cancels Tax relief of low-Income salaried workers
ISLAMABAD: The Federal Board of Revenue (FBR) announced during a session of the National Assembly’s Standing Committee on Finance and Revenue that it has reversed the proposed tax relief for low-income salaried persons.
Members of the committee spent a considerable portion of the recent proceedings discussing the conflicting tax rates for low-income salaried persons. Although Finance Minister Muhammad Aurangzeb announced a 2.5% tax rate on annual incomes between Rs600,001 and Rs1.2 million during his budget speech, the Finance Bill 2025 listed the rate as 1%.
FBR Chairman Rashid Mahmood Langrial clarified the discrepancy by informing the committee that the federal cabinet had decided to reverse the proposed tax relief for low-income salaried persons, effectively reinstating the higher tax burden.
Finance Minister justifies the cabinet’s Tax reversal move:
The newly appointed Minister of State for Finance, Bilal Azhar Kayani, defended the cabinet’s decision by arguing that the adjustment aligned with updated projections. He explained that the government had revised the salary increase for its employees from the earlier estimate of 6% to 10%, which justified the change.
However, committee members raised concerns that the salary increase would benefit only public sector employees. They pointed out that the revised tax policy would disproportionately impact private sector earners, who would not receive any benefit from the government’s pay hike.
Committee Chairman Naveed Qamar questioned the decision to withdraw the relief and highlighted how it adds financial strain on lower-income earners in the private sector.
Elsewhere in the session, officials informed the panel that the federal government had decided to increase the cash withdrawal limit for non-filers from Rs50,000 to Rs75,000 before applying the withholding tax.
Committee Chairman Naveed Qamar initially proposed raising the limit to Rs100,000, but both the FBR and the committee agreed to set it at Rs75,000. They revised the limit to strike a balance between effective tax enforcement and public convenience.
