Senate Committee Recommends Zero Income Tax for Salaries Up to Rs. 1.2 Million
June 18, 2025 – Islamabad:
In a key proposal during budget discussions, the Senate Standing Committee on Finance has recommended exempting annual incomes up to Rs. 1.2 million from income tax, aiming to ease the financial burden on lower and middle-income earners.
Tax Relief for Salaried Individuals
The recommendation came as Senator Shibli Faraz argued in favor of zero tax on salaries between Rs. 600,000 and Rs. 1.2 million per year. He highlighted the financial strain on citizens earning modest monthly incomes.
“Someone earning Rs. 100,000 a month ends up taking home only Rs. 42,000 after all deductions,” Faraz noted, underlining the urgency for tax reforms.
This move, if approved, would provide significant relief to salaried individuals across Pakistan and improve their disposable income during a time of economic pressure.
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Taxing Elite Clubs Sparks Debate
The committee also reviewed a proposed tax on income generated by elite clubs—institutions often frequented by a limited, affluent group.
FBR Chairman Rashid Mahmood Langrial clarified that while the tax would be implemented, the revenues from such clubs benefit only a small group of around 300 individuals and do not contribute to public welfare.
Interestingly, Committee Chairman Senator Saleem Mandviwala opposed the tax on club income, raising eyebrows during the session.
However, Minister of State for Finance Bilal Azhar Kayani defended the proposal, emphasizing that the tax would only apply if a club’s income exceeds its expenditures, and that it is aimed at Pakistan’s privileged class.
“This measure won’t affect the average citizen and is intended to bring fairness to the system,” Kayani explained.
Broad Support for Progressive Tax Measures
Most members of the committee backed the idea of taxing luxury club income while supporting tax relief for low- to middle-income earners. The proposals are now set to be further evaluated as budget finalization continues.
Conclusion
With growing calls for progressive taxation and economic fairness, the Senate’s recommendation to exempt incomes up to Rs. 1.2 million from tax and impose levies on elite club revenues reflects an effort to balance public welfare with responsible fiscal policy.
