ISLAMABAD: Pakistan’s federal government is poised to unveil a Rs17.6 trillion budget for the fiscal year 2024–25 today, aiming to boost revenue collection through wide-ranging tax reforms while providing financial relief to lower-grade government employees and pensioners.
The Federal Board of Revenue (FBR) has set an ambitious tax collection target of Rs14.13 trillion — the highest in the country’s history. Total projected income for the fiscal year stands at Rs19.4 trillion, underscoring the government’s limited fiscal space and the need for both additional taxation and selective duty relief.
Relief Measures for Government Employees and Pensioners
In a major move to support public sector workers, employees in Grades 1 to 16 are expected to receive a 30% salary allowance. Additionally, an ad hoc relief allowance will be incorporated into their basic pay. Retired government employees are also likely to benefit, with pensions set to increase by 5% to 7.5%.
Expanding the Tax Net: Freelancers, Digital Creators, Agriculture
In a notable shift in tax policy, the government plans to expand the tax net to include freelancers, international digital content creators, and social media earners — a step aligned with IMF recommendations. Income generated through online platforms and foreign clients will now be subject to taxation.
The budget is also expected to introduce a long-awaited mechanism for taxing agricultural income — a measure repeatedly emphasized by the IMF and domestic economic experts.
Taxation of Essential Goods
The IMF has pressed for the removal of sector-specific tax exemptions, with new taxes proposed on previously untaxed items such as fertilizers, pesticides, and bakery products. If implemented, this move could result in higher prices for essential goods.
Property and Regional Tax Adjustments
On the property front, the federal excise duty on real estate transactions is likely to be eliminated, potentially encouraging formal market activity. However, new taxation measures are under consideration for the former Federally Administered Tribal Areas (FATA), including the imposition of a 12% general tax — ending the region’s longstanding exemption.
The budget’s combination of new revenue measures and targeted relief seeks to balance IMF-driven fiscal reforms with domestic economic pressures, all while attempting to maintain social stability ahead of critical economic milestones.
