As Pakistan gears up to present its federal budget for the next fiscal year (2025-26) on June 10th, two key groups – teachers and solar energy users – are set for positive developments, offering a glimmer of relief amid economic pressures.
In a significant announcement, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial confirmed on Thursday that concrete measures are being finalized to ease the burden on the salaried class and boost sustainable energy. The standout win? A dedicated 25% income tax rebate for teachers starting next financial year.
This move, hailed as crucial support for educators grappling with soaring living costs, represents a major step in recognizing their vital role. "Tax relief for teachers is a priority," Langrial indicated, though he clarified discussions are still ongoing about whether this benefit will come as a direct refund or an adjustment within the current fiscal year. Regardless of the mechanism, the commitment to tax relief for teachers is clear.
Solar panel users and importers can also breathe easier. Despite recent speculation and recommendations from the International Monetary Fund (IMF) urging the abolition of all tax exemptions (including those for solar panels), Langrial delivered reassuring news. He explicitly stated that no decision has been made to impose additional taxes on solar panel imports, and crucially, there is currently no proposal to increase the existing tax rate on them.
This clarification is a win for Pakistan's clean energy push. Langrial emphasized that while the government is broadly reviewing tax exemptions across various sectors, promoting essential areas like education and renewable energy remains a key consideration for long-term development. "We are mindful of promoting sectors like education and clean energy," he stated.
The path for some tax reforms is already being paved. Langrial noted that the Senate Standing Committee on Finance has approved the Income Tax Second Amendment Bill 2025, setting the stage for reforms designed to enhance revenue collection without unduly burdening vulnerable groups.
Negotiations are also actively underway with the IMF. Langrial revealed efforts are focused on securing further relief, particularly for the salaried class, and exploring concessions for other key sectors as part of the overall budget strategy. This comes after the IMF's recent push for a uniform tax regime, including removing solar incentives.
Finance Secretary Imdadullah Bosal confirmed the budget timeline is firm. Barring any last-minute changes to preparatory meetings, the Pakistan Economic Survey for FY25 will be released on June 9th, followed by the presentation of the Federal Budget for FY 2025-26 to Parliament on June 10th.
