ISLAMABAD: A parliamentary committee on Saturday approved key amendments to the Finance Bill 2025, including tax relief for low-income salaried individuals, a reduction in the super tax rate, and an increase in the cash withdrawal threshold for non-filers.

The National Assembly Standing Committee on Finance and Revenue, chaired by MNA Naveed Qamar, carried out a clause-by-clause review of the Finance Bill 2025 — a departure from previous years when only one or two sessions were typically held. The committee also reviewed amendments to the Islamabad Capital Territory (Tax on Services) Ordinance 2001, and recommended their approval by the National Assembly.

A major proposal endorsed by the committee is the reduction of the income tax rate from 2.5pc to 1pc for salaried individuals earning between Rs600,000 and Rs1.2m annually. Additionally, the committee supported a 0.5pc cut in the super tax on the corporate sector.

Cash withdrawal limit

In banking, the committee approved increasing the daily cash withdrawal limit for non-filers from Rs50,000 to Rs75,000, while raising the withholding tax on such withdrawals from 0.6pc to 0.8pc. It also supported withdrawing the tax exemption on deposits held for less than six months in Special Convertible Rupee Accounts. Similarly, foreign investors will lose exemptions if their funds remain in special accounts for less than a year, as per the State Bank.

Committee rejects income tax on teachers, imposes 5pc tax on pensions above Rs10m

In digital commerce, the committee approved a 2pc withholding tax on cash-on-delivery (COD) transactions and a 1pc tax on domestic online purchases made through bank transactions. It further recommended collecting data from banks on individuals whose banking activity exceeds their declared income in wealth statements. FBR Chairman Rashid Mahmood Langrial said a computerised algorithm would flag such cases, with banks required to share only CNIC numbers.

The committee also approved the deployment of FBR personnel in designated business zones but rejected a proposal to penalise unregistered online sellers. It instead recommended retaining tax exemptions for online sales up to Rs5m annually to support small-scale digital businesses.

Among other approved measures were increased sales tax on offshore digital payments — from 5pc to 15pc — and a 15pc tax on digital ads placed on platforms like Google, YouTube, and Facebook.

Rejects tax on teachers

The committee rejected a proposal to impose income tax on teachers and researchers, a measure reportedly pushed by the IMF. Chairman Langrial said the Fund repeatedly refused to yield, and exemptions for educators will end in the upcoming fiscal year. Similarly, the IMF also declined Pakistan’s request to remove sales tax on stationery items.

Further, the committee backed a 5pc income tax on annual pensions exceeding Rs10m and endorsed tax relief measures for the real estate sector. Non-profit organisations will retain tax-exempt status, but must now submit financial statements every three years.

Tax exemptions for Special Economic Zones (SEZs) and Technology Zones were also approved to continue through 2035.

The committee also reviewed and recommended minor amendments to the Digital Presence Proceeds Tax Act, 2025, and endorsed most proposed revisions to the Income Tax Ordinance, 2001, with further technical corrections.

The changes mark a shift toward widening the tax net, promoting digital compliance, and providing targeted relief, while resisting some IMF-driven proposals considered detrimental to education and small businesses.

Published in Dawn, June 22nd, 2025