Reducing tax incidence within IMF programme high priority: Kayani

ISLAMABAD: Minister of State for Finance Bilal Azhar Kayani said Monday the main focus of the federal budget (2026-27) is to reduce incidence of taxes on overburdened segments of society, particularly salaried class, within the International Monetary Fund (IMF) programme.

Minister of State for Finance was briefing the National Assembly Standing Committee on Finance on Monday on key features of the Finance Bill 2026.

According to him, despite all kinds of fiscal constraints, the government has been able to provide relief to the salaried class. Last year, the government provided significant relief to the salaried individuals. This year further relief has been provided in different salary slabs along with abolition of surcharge.

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The Committee was informed that the relief package includes the abolition of taxes on contraceptives and selected women-related products, withdrawal of Capital Value Tax on foreign assets, exemption of sales tax for the shipping industry, and tax incentives for the modernization and upgrading of Brownfield refineries. These measures are aimed at stimulating investment, promoting exports, supporting economic activity, and easing the overall tax burden on key sectors of the economy.

The Committee was also briefed on rationalization measures, including expansion of the Third Schedule, introduction of a fixed tax regime for small retailers, revision of tax treatment of coupon-washing transactions, elimination of tax arbitrage between industrial and commercial importers, enhancement of penalties for non-compliance, rationalization of withholding taxes on services, imposition of duties on luxury vehicles, and measures to curb fuel adulteration through adjustable Federal Excise Duty on solvents and related products.

Syed Naveed Qamar, Chairman expressed serious concerns regarding the potential revenue implications of the proposed concessions and the adequacy of efforts to broaden the tax base. The Chair sought clarity on whether the anticipated revenue losses had been adequately quantified and requested details of the Government’s strategy to offset any resulting fiscal shortfall.

Minister of State for Finance and senior officials of the Federal Board of Revenue (FBR) briefed on the proposed tax measures, fiscal reforms, and revenue initiatives contained in the Federal Budget FY 2026–27.

The Committee also deliberated on relief for salaried individuals in the context of persistent inflation and rising living costs, and sought clarification on whether the proposed tax slab revisions would provide meaningful relief to middle-income groups.

Copyright Business Recorder, 2026