Budget 2025–2026: IMF agreement is required for tax relief for the salaried class

While a major legislative proposal that would have required income source disclosures on property purchases exceeding Rs10 million has been delayed until the next fiscal year, tax relief for Pakistan’s salaried class, which is proposed in the upcoming federal budget, will depend on the International Monetary Fund’s (IMF) approval.

Syed Naveed Qamar of the PPP presided over Tuesday’s meeting of the National Assembly’s Standing Committee on Finance and Revenue, where these developments took place.

Significant changes to the “Tax Laws Amendment Bill,” which were intended to deter the use of unreported funds in the real estate industry, were also approved by the committee.

IMF visit to assess extent of tax reductions

Chairman of the Federal Board of Revenue (FBR), Rashid Mahmood Langrial, told the committee that while the government is proposing reductions in tax rates for salaried individuals in the 2025-26 budget, the final decision will depend on the IMF.

“The IMF mission is scheduled to visit Pakistan in the second week of May to deliberate on the proposed budgetary measures,” Langrial said, adding that negotiations with the Fund are ongoing and any fiscal adjustments must be aligned with its recommendations.

Deferred disclosure requirements for real estate purchases

The committee was informed about the government’s previous plan to prohibit people from buying real estate worth more than Rs10 million (Rs1 crore) if they failed to disclose their assets on their most recent five years’ worth of tax forms. The committee did, however, agree to postpone the bill and take it into consideration for the upcoming federal budget.

Members pointed out that the purpose of the postponement was to give the FBR time to finish necessary technical improvements to its online infrastructure so that property transactions could be tracked more effectively and asset declarations could be verified.

First-time purchasers are exempt.

An exemption for first-time homebuyers was authorised by the Standing Committee, which is a huge comfort to potential homeowners. The eligibility of such individuals will be assessed based on “sufficient resources,” which the FBR defined as possessing assets — such as cash, gold, stocks, or bonds — equivalent to 130 per cent of the property’s market value.

In order to shield citizens with lower and intermediate incomes from the unforeseen repercussions of the proposed restrictions, an exemption was introduced. However, the committee turned down a proposal by real estate developers to increase the exemption threshold to Rs50 million.

The committee also approved an amendment replacing the word “Board” with “Federal Government” in section 114C(1)(b) of the Income Tax Ordinance. This change grants the federal cabinet — instead of the FBR — the authority to determine the monetary threshold for property transactions that would require documented income.

According to the approved language, the federal government will consider the interests of the general public, particularly first-time or primary residence buyers, while setting any future value limits.

Ministries that do not pay the minimum wage

Separately, the committee expressed concern over reports that several government departments have failed to implement the minimum wage of Rs37,000, as mandated by the federal government. The committee called for strict enforcement and sought accountability from the relevant ministries.

FBR to present revised draft in next budget

Chairman FBR Rashid Langrial assured the committee that a revised draft of the property-related income disclosure law — incorporating technical changes and public feedback — will be presented as part of the budget proposals for the financial year 2025-26.

The sub-committee working on the bill, led by PML-N’s Bilal Azhar Kiani, was constituted earlier this year and held consultations with key stakeholders, including builders and real estate agents. It also reviewed aggregated data provided by the FBR on property transactions in 2023-24.

The proposed reforms, officials said, are aimed at curbing tax evasion and regulating the real estate sector while ensuring that genuine buyers — especially those entering the property market for the first time — are not penalised.