ISLAMABAD: The lower house of parliament on Thursday greenlighted the federal budget for the next fiscal year after making certain amendments to the Finance Bill 2026.

The budget, for the FY 2025-26, with a total outlay of Rs17.57 trillion was unveiled by the federal government two weeks ago.

Finance Minister Muhammad Aurangzeb presented the finance bill in the lower house, where it received backing from the ruling coalition, including the Pakistan Peoples Party (PPP).

The finance bill was passed with a majority vote after clause-by-clause reading and adopting amendments after due process of voting.

During the proceedings, FinMin Aurangzeb presented the amendments to the Sales Tax Act 1990, including a provision granting the finance committee authority to order the arrest of traders involved in tax fraud exceeding Rs50 million.

An earlier version of the proposal had sought to give this power directly to tax commissioners.

All amendments to the Sales Tax Act introduced by opposition members were rejected by majority vote.

The Finance Bill 2025 also introduces a revised income tax structure for salaried individuals. Those earning up to Rs600,000 annually will continue to be exempt from income tax. Salaries ranging above Rs600,000 to Rs1.2 million will be taxed at 1%.

Likewise, individuals with annual incomes between Rs1.2 million and Rs2.2 million will pay a fixed tax of Rs6,000.

Further, those earning between Rs2.2 million and Rs3.2mn will be taxed at Rs116,000. For annual incomes between Rs3.2 million and Rs4.1 million, the tax will be Rs346,000.

Meanwhile, Prime Minister Shehbaz Sharif lauded the entire economic team, particularly Finance Minister Muhammad Aurangzeb, for their hard work and dedication in preparing the federal budget. He also expressed gratitude to the federal cabinet and the allied political parties for their support in finalising the budget.

Earlier in the day, the federal cabinet, in a meeting chaired by PM Shehbaz, approved the Finance Bill 2025 with amendments before it was presented in the National Assembly for voting.

In a separate decision, the cabinet decided to form a committee to address a specific agenda item related to gas policy. The committee will present its recommendations to the Supreme Court as part of ongoing legal proceedings.

Speaking in the National Assembly during a budget session on Thursday, Pakistan Peoples Party (PPP) Chairman Bilawal Bhutto Zardari welcomed the federal government’s decision to include key proposals in the budget put forward by his party.

The former foreign minister praised the incumbent government for increasing the Benazir Income Support Programme (BISP) by a record 20%, calling it a “commendable step” and a clear reflection of the government's commitment to social protection.

PPP leader was of the view that the govt had raised the annual income tax exemption limit for salaried individuals from Rs600,000 to Rs1.2 million — a move he described as a major relief for the middle class, state news agency reported.

Bilawal also credited PPP’s active role in securing a 50% reduction in proposed taxes on solar panels.

The PPP chairman further said that the party had successfully pushed for amendments to restrict the Federal Board of Revenue’s (FBR) powers of arrest.

He explained that under the revised provisions, arrest powers could only be exercised after the conclusion of inquiries specifically involving sales tax fraud.

Bilawal Bhutto-Zardari expressed gratitude to PM Shehbaz Sharif and Finance Minister Muhammad Aurangzeb for accepting the majority of PPP’s recommendations.

“Our commitment is to ensure that every budgetary decision serves the national interest and prioritises the welfare of ordinary citizens,” he added.

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— With additional input from APP