Sales Tax Relief Cleared for Businesses in Malakand and Merged Districts
The Khyber Pakhtunkhwa cabinet has approved important tax relief measures for businesses operating in Malakand Division and the former tribal areas, while also clearing new initiatives covering youth employment, education, healthcare and compensation for victims of militant attacks.
The provincial cabinet, chaired by Chief Minister Sohail Afridi, approved two draft notifications relating to provincial sales tax relief during its meeting on Wednesday.
Under the first proposed notification, local service providers will be exempted from sales tax on services.
The second draft notification will exempt industrial undertakings established or operating in Malakand Division and the former tribal areas from the requirement to withhold sales tax.
The approval is particularly significant because businesses and traders in Malakand and the merged districts have been demanding continuation of tax concessions, arguing that the regions continue to face economic disadvantages, limited industrialisation, security challenges and higher transportation costs.
The provincial government has also been pressing the federal government to reconsider the withdrawal of federal tax exemptions for these regions.
Chief Minister Sohail Afridi wrote to Prime Minister Shehbaz Sharif in July, arguing that exemptions had originally been designed to promote investment, industrial development and employment in historically disadvantaged areas.
KP Governor Faisal Karim Kundi also subsequently urged the federal government to restore tax relief for the former tribal areas and Malakand Division, saying provincial relief alone would be incomplete if federal taxes continued to apply.
The latest cabinet decision relates to provincial sales tax measures and should therefore not be interpreted as an exemption from all federal taxes.
Ehsaas Naujawan Funding Increased to Rs5 Billion
Alongside the tax measures, the cabinet approved a major expansion of the Ehsaas Naujawan Programme.
The programme’s allocation has been increased from Rs3 billion to Rs5 billion due to growing demand and a rising number of applications.
Provincial Information Minister Shafi Jan said the initiative is designed to promote youth entrepreneurship, self-employment, financial inclusion and sustainable livelihood opportunities.
The additional Rs2 billion is expected to allow more young people to benefit from financing and employment-related support under the programme.
The initiative forms part of the provincial government’s efforts to create economic opportunities for young people at a time when unemployment and limited access to business capital remain major challenges.
Rs248.8 Million Approved for Schools in Merged Districts and Chitral
Education was another major focus of the cabinet meeting.
The government approved a one-time grant of Rs188.8 million for model schools operating in the merged districts during the current fiscal year.
An additional Rs60 million grant was approved for Langlands School and College in Chitral.
Together, the two education grants amount to Rs248.8 million.
The cabinet also approved an inter-departmental memorandum of understanding aimed at reducing the number of out-of-school children across Khyber Pakhtunkhwa.
Pakistan continues to face a major challenge in bringing children into formal education, while remote and conflict-affected areas of KP have particularly struggled with access to schools and education infrastructure.
New Textbook System Planned From 2027-28
The cabinet also approved significant changes to the province’s textbook system.
Beginning with the 2027-28 academic year, students from kindergarten to Grade 5 will use a semester-based “jacketed” textbook system.
Under the proposed model, two or more core-subject textbooks will be combined under a single cover without changing the approved curriculum.
The KP Textbook Board proposed the system as a way to reduce the weight of school bags and lower the amount of material students are required to carry at one time.
The system is initially planned for KG to Grade 5 and will later be extended to Grades 6 through 8.
The cabinet additionally approved 100 percent free textbooks for students in Grades 9 to 12.
The move expands the government’s education support beyond primary and middle-school students and is intended to reduce schooling expenses for families.
Rs66.6 Million Approved for Treatment of 21 Patients
Healthcare assistance was also included in the cabinet’s decisions.
The provincial government approved Rs66.6 million in financial assistance for the medical treatment of 21 deserving patients.
The allocation is intended to help patients requiring expensive medical care who may otherwise be unable to afford treatment.
The cabinet also approved the appointment of the chief executive officer of the Khyber Pakhtunkhwa Transmission and Grid System Company, another step linked to the province’s energy-sector administration.
Compensation Raised for Victims of Militant Attacks
The cabinet approved significantly higher compensation for civilians affected by targeted militant attacks.
For specific victims in Bajaur, the government approved Rs10 million for the legal heirs of each person killed and Rs2.5 million for people suffering major or minor injuries.
The enhanced compensation was approved as a relaxation of the existing policy.
The cabinet also approved a broader increase in the standard compensation package for civilian victims of such attacks.
Under the revised general package, compensation for the legal heirs of a person killed will increase from Rs1 million to Rs5 million.
Compensation for people suffering major injuries will rise to Rs1.5 million.
The decision comes as several districts of Khyber Pakhtunkhwa continue to face security challenges and militant violence, creating pressure on the provincial government to provide greater financial support to affected families.
KP Sets Rs180 Billion Revenue Target
Despite approving tax relief for Malakand and the former tribal areas, the provincial government says it remains confident about increasing overall revenue collection.
Chief Minister Sohail Afridi said the province has set a Rs180 billion revenue target for the current fiscal year.
He expressed confidence that the target could be achieved through stronger revenue mobilisation and administrative reforms.
Afridi has previously said KP collected more than Rs150 billion in own-source revenue against a Rs129 billion target and aims to continue increasing receipts through digitisation and institutional reforms.
The latest cabinet decisions therefore combine targeted tax concessions for economically sensitive regions with broader efforts to increase provincial revenues.
For residents and businesses in Malakand and the merged districts, attention will now turn to the formal issuance and implementation of the approved tax notifications.
