• Senate adopts 123 budget recommendations; proposals to be sent to NA
• Calls for lower GST on food, medicines, educational material
• Taxes, duties on farm inputs proposed to be reduced
• Higher allocations for health, education, scholarships
• Tax incentives for IT exporters, freelancers proposed for 10 more years
• Mandviwalla urges govt to avoid repeating budget mistakes
ISLAMABAD: The Senate on Thursday adopted 123 recommendations on the federal budget for fiscal year 2026-27, seeking an increase in the income tax exemption threshold for low-income earners, relief for the salaried class, a reduction in electricity bills and higher taxes on luxury assets.
A motion for this purpose was moved by Senate Standing Committee on Finance and Revenue Chairman Saleem Mandviwalla.
The standing committee finalised the recommendations earlier in the day. The report was then laid before the Senate for adoption and will now be transmitted to the National Assembly, as required under the Constitution. The National Assembly will take up the recommendations before the final vote on the budget.
The Senate recommended an increase in the income tax exemption threshold for low-income earners and a reduction in tax rates for salaried individuals affected by inflation. It also proposed rationalising the 7.5 to 8 per cent income tax deducted at source as a simplified final tax regime.
The upper house called for expansion of targeted social protection programmes for vulnerable households and reduction in general sales tax on essential food items, medicines, educational material and agricultural inputs. It also recommended avoiding new taxes on necessities that disproportionately affect lower-income groups.
On electricity, the Senate recommended allocation of funds to reduce power tariffs, a transparent roadmap for reducing capacity payments and circular debt, and targeted subsidies for low-consumption domestic consumers. It also called for withdrawal of fixed charges, financing cost surcharge and GST on electricity bills, as well as removal of additional withholding taxes collected through bills from consumers who are already registered taxpayers.
For agriculture, the Senate proposed reduction in taxes and duties on fertilisers, seeds, pesticides and agricultural machinery, along with increased allocations for water conservation and agricultural research.
The recommendations also called for higher federal allocations for public hospitals, primary healthcare, higher education, scholarships and vocational training programmes. The Senate sought a minimum recurring budget of Rs130bn for universities in FY27, to be raised to Rs190bn by FY31.
The Senate also recommended publication of all tax exemptions and concessions granted to specific sectors or entities, periodic reporting to parliament on public debt, circular debt and major public sector expenditures, reduction in non-development expenditure where possible and presentation of a medium-term debt reduction strategy before parliament.
For businesses, the recommendations called for simplification of tax procedures for small and medium-sized enterprises, concessional financing and incentives for employment-generating industries, and reinstatement of the 1pc final tax regime and sales tax refunds within 72 hours for exporters. It also recommended extending tax incentives for IT exporters and freelancers for another 10 years and cutting advance tax on telecom services from 15pc to 8pc.
It also called for increased taxation on luxury vehicles above 3,000cc, luxury properties and non-productive assets, as well as high-end mobile phones, imported chocolates, soft drinks, cosmetics, watches and jewellery. A 5pc to 10pc luxury consumption levy on non-essential imports was also proposed.
‘Avoid repeating mistakes’
Elaborating on the recommendations in the Senate, Mr Mandviwalla said he was presenting the Senate Standing Committee on Finance and Revenue’s suggestions for the eighth consecutive budget. “We should avoid repeating the mistakes made every year,” he said.
The PPP senator stressed the need for measures to put the economy on the path to stability and called for steps to promote solar energy across the country.
He also called for the abolition of taxes on transactions through credit cards and ATM cards, saying they placed an “unnecessary burden” on consumers.
Further detailing the committee’s recommendations, he said a minimum 15pc increase in salaries of government employees had been suggested, while a reduction in taxes on food items and the agriculture sector had been proposed to provide relief to the public and support economic activity.
Expressing concern over social sector spending, he said allocations for health and education had been kept very low in the budget. He also noted that existing taxpayers were being further burdened instead of the tax base being broadened.
Mr Mandviwalla said the committee’s report proposed several practical and effective recommendations aimed at improving the budget and addressing public concerns.
The Senate was given the responsibility to submit budget recommendations under the 18th Amendment in 2010. Under the Constitution, however, the Senate has no power to vote on a money bill, a power that lies exclusively with the NA, which is the directly elected house.
Iftikhar A. Khan also contributed to this report
Published in Dawn, June 19th, 2026