Major Boost in BISP Budget
The Government of Pakistan has taken important decisions for public welfare in the budget for the fiscal year 2025-26, the most prominent of which is a 20% increase in the BISP budget of the Benazir Income Support Program. Now the budget of this program has been increased from Rs 592 billion to Rs 716 billion, which will provide direct financial assistance to about one crore families. This increase is great news for the people who are under the pressure of inflation and poverty.
On the other hand, the government has also given great relief to the salaried class and pensioners above the age of 75. The tax rate on annual income of Rs 600,000 to 120,000 has been reduced to only 1%, while people above the age of 75 have been completely exempted from tax. In addition, a 20-year loan scheme is also being introduced for low-income families who want to buy or build a house for the first time, with the aim of giving every Pakistani their own home.
Talking about farmers, the government has decided to provide loans of up to Rs 1 million to small farmers through digital channels without any collateral. This loan will enable the purchase of fertilizers, seeds, agricultural chemicals and diesel, while crop and life insurance will also be included. At the same time, tax on solar panels has been reduced to 10% to get rid of the electricity crisis. Such decisions prove that this budget is not just a statistic but a serious effort to improve the lives of ordinary Pakistanis.
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Benazir Income Support Programme Budget Increased by 20%
One of the most significant and impactful announcements in the Finance Bill 2025 is the increase in BISP’s annual budget. The budget has risen from Rs. 592 billion to Rs. 716 billion a 20% jump. This increase aims to extend financial support to over 10 million deserving families across Pakistan. The rise in allocation is expected to enhance the scale and efficiency of disbursements under BISP, providing a stronger social safety net amid growing inflation and economic instability. This move also highlights the government’s focus on poverty alleviation.
- Over 10 million families will now receive financial aid under BISP.
- This move reflects the government’s strong commitment to expanding social safety nets in the face of rising inflation.
Big Relief for 75+ Pensioners: No More Income Tax
Senior citizens aged 75 and above will now be fully exempt from income tax. This is a long-awaited move that recognizes the limited financial capacity of elderly individuals living on pensions. It ensures more money stays in their pockets to support healthcare, daily expenses, and dignified living. This exemption reflects compassion from the state towards senior citizens and aims to reduce their financial burden.
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Tax Relief for Salaried Class: Only 1% Tax on Rs. 6-12 Lakh Income
The salaried middle class, often squeezed by inflation and stagnant incomes, will receive meaningful tax relief. The government has reduced the tax rate on annual income between Rs. 6 to 12 lakh from 2.5% to just 1%. Additionally, commutation and gratuity amounts will no longer be taxed. These measures provide a sigh of relief to millions of working individuals and families, improving their monthly disposable income.
- Earlier proposed 2.5% tax on income between Rs. 6 to 12 lakh/year has now been slashed to just 1%.
- No tax will be applied to commutation and gratuity amounts.
This is a massive relief for the working class already burdened by inflation.
No Sales Tax Hike on Locally Made Hybrid Cars
To boost local automobile manufacturing and promote eco-friendly transportation, the government has decided not to impose any new sales tax on locally produced hybrid cars. This move will keep these vehicles more affordable for the public and will help encourage a shift toward cleaner technologies. It’s also a strong signal to investors in the local auto sector.
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Solar Panel Tax Reduced from 18% to 10%
In a great move to make solar energy more accessible, the government has reduced the sales tax on solar devices from 18% to 10%. This reduced tax applies only to 46% of imported components used in solar equipment. The result will be just a 4.6% increase in the price of imported solar panels, which keeps solar energy within reach for households and businesses looking to lower their electricity costs.
- Sales tax on solar devices reduced from 18% to 10%.
- This tax will only apply to 46% of imported components.
- The estimated increase in solar panel cost will be just 4.6%, keeping solar energy accessible.
Major Relief in Property & Vehicle Withholding Taxes
In a bid to support real estate and ease property acquisition for citizens, the government has removed withholding tax on residential plots or houses worth up to Rs. 5 crore, commercial properties worth up to Rs. 10 crore, and vehicles worth up to Rs. 70 lakh. No withholding tax will apply if the property is used personally for at least one year. However, this benefit can only be used once in 15 years per individual to prevent misuse.
- No withholding tax on purchasing:
- Residential plots/houses worth up to Rs. 5 crore
- Commercial properties worth up to Rs. 10 crore
- Vehicles up to Rs. 70 lakh
- Residential plots/houses worth up to Rs. 5 crore
- No tax will be applied to residences used for personal purposes for 1 year or more.
- However, this exemption will apply to only one property sale in 15 years, preventing misuse.
Hatchery Chicks to Be Taxed: Rs. 10 FED per Chick
To regulate the poultry industry and generate revenue, the government has imposed a Federal Excise Duty (FED) of Rs. 10 per day-old chick. This decision may impact poultry prices slightly, but is seen as a move to formalize and structure the poultry business.
Stronger Tax Fraud Regulations – No Arrest Without Warrant Under Rs. 5 Crore
To protect small business owners and prevent misuse of tax laws, new safeguards have been introduced. The Federal Board of Revenue (FBR) cannot arrest anyone for tax fraud involving cases worth under Rs. 5 crore without a court-issued warrant. The new categorization of arrestable and non-arrestable tax offenses provides a more transparent and fair system.
- Cases below Rs. 5 crore in value: FBR cannot arrest without a court warrant.
- This ensures fairness and protects small businesses from misuse of authority.
Cotton Tax Removed, But Yarn Import Relief Withdrawn
To support the agriculture sector, the government has eliminated sales tax on cotton. This will reduce costs for local farmers and boost the cotton industry. However, the tax and duty exemptions on imported yarn and cotton thread have been withdrawn. This is intended to support local manufacturers and reduce reliance on imports.
- Sales tax on cotton has been completely removed to support local farmers.
- However, import of yarn and cotton thread will no longer have tax/duty exemptions.
Big Plans for Agriculture – Interest-Free Loans for Small Farmers
The government has launched a flagship loan program for farmers owning up to 12.5 acres:
- Up to Rs. 10 lakh digital loan without collateral.
- Can be used for fertilizers, seeds, pesticides, diesel.
- Includes crop and life insurance for farmers.
20-Year Home Loans for Low-Income Citizens
To promote housing, a new loan scheme is being introduced for low-income families:
- 20-year mortgage loans for first-time homebuyers.
- Aim is to help poor families build or buy their own house.
EV Policy Coming Soon
Finance Minister hinted that a new policy for electric vehicles (EVs) will be announced soon to promote clean and sustainable transportation in Pakistan.
Tax Rate on Debt Income Increased
The tax on income from debt instruments has been increased:
- From 25% to 29%, effective in the upcoming fiscal year.
Political Drama in the National Assembly
The finance session wasn’t free from political tension. Heated exchanges were witnessed during Bilawal Bhutto Zardari’s speech. PTI members, including Iqbal Afridi, protested loudly, tearing agenda copies and clashing with PPP members near the Speaker’s desk.
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Summary of Key Benefits in Budget Changes
| Category | Major Relief |
| BISP | Budget increased to Rs. 716 billion |
| Pensioners (75+ years) | No income tax |
| Salaried Class | 1% tax on Rs. 6–12 lakh income |
| Solar Energy | Tax reduced to 10% |
| Property Buyers | No tax up to Rs. 5-10 crore |
| Farmers | Rs. 10 lakh interest-free digital loans |
| Homebuyers | 20-year low-income mortgage scheme |
| Hybrid Cars | No new tax |
| Cotton Sector | Sales tax removed |
| Tax Fraud Cases | Arrest only above Rs. 5 crore |
Final Thoughts
This year’s revised finance bill clearly reflects the government’s aim to protect vulnerable communities, strengthen the middle class, and promote inclusive economic growth. The major budget bump for BISP, tax relief for pensioners and salaried classes, and support for small farmers and homeowners are all bold steps in the right direction.
But challenges remain – especially in implementing reforms efficiently and curbing misuse of relief programs. Let’s hope the government ensures transparency and delivery, so these benefits truly reach the people who need them most.
Also read: 8171 BISP Payment Message Not Received?
FAQs
How much is the BISP budget now?
It has increased by 20%, from Rs. 592 billion to Rs. 716 billion.
Who is exempt from income tax now?
Pensioners aged 75 and above are fully exempt.
What is the new tax rate for salaried people earning Rs. 6-12 lakh?
Just 1% down from the earlier proposed 2.5%.
Is there still tax on solar panels?
Yes, but reduced to 10%, and only on 46% of imported components.
What support is there for farmers?
Up to Rs. 10 lakh in digital, collateral-free loans with insurance.