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Wednesday, July 16, 2025

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Over 50 New Tax Exemptions Introduced in Finance Bill 2025–26

ISLAMABAD: Parliament has approved the Finance Bill 2025–26, introducing over 50 new tax exemptions across a broad spectrum of institutions and individuals, ranging from charitable organisations and state-owned enterprises to pension benefits and international development bodies.

The bill is expected to be signed into law by President Asif Ali Zardari today, converting it into the Finance Act 2025–26. It marks a significant expansion in the tax-exempt category, especially for non-profit organisations (NPOs) and state-affiliated entities.

Among the newly listed exemptions are pensions of former presidents and their widows, Karandaaz Pakistan, Army Welfare Trust, Fauji Foundation, and the Federal Board of Revenue Foundation. The State Bank of Pakistan, Pakistan Agricultural Research Council, Pakistan Council of Scientific and Industrial Research, and WAPDA, along with its corporatised entities, are also included.

Numerous national relief funds have received exemptions, including:

  • Prime Minister’s Special Fund for Victims of Terrorism

  • PM’s COVID-19 Relief Fund

  • Chief Minister Punjab’s IDP Relief Fund

  • Supreme Court’s Diamer Bhasha & Mohmand Dams Fund

  • National Disaster Risk Management Fund

  • National Endowment Scholarship for Talent (NEST)

Several Islamic finance and sukuk-related entities have also been granted exemptions, including:

  • Pakistan Domestic Sukuk Company Ltd

  • WAPDA’s multiple Sukuk companies

  • Pakistan Global Sukuk Programme Company Limited

  • Islamic Naya Pakistan Certificates Company Limited

International and multilateral financial institutions now exempt include:

  • International Finance Corporation (IFC)

  • Asian Development Bank (ADB)

  • Asian Infrastructure Investment Bank (AIIB)

  • ECO Trade and Development Bank

  • Islamic Chamber of Commerce and Industry

  • Islamic Corporation for Development of the Private Sector

The Agha Khan Development Network, as specified in a 1994 agreement with the Government of Pakistan, retains its exempt status. The list also includes scientific and diplomatic bodies such as COMSATS, SAARC Arbitration Council, and the International Parliamentarians’ Congress.

Additionally, cash awards granted to sportspersons representing Pakistan in Olympic Games will now be tax-exempt from tax year 2025 onwards. The exemption also extends to the Army Officers Benevolent Fund and Bereaved Family Scheme.

The expanded exemption regime reflects the government’s approach to encourage philanthropy, strategic development initiatives, and align with international commitments, though it may also impact the tax base and revenue targets set under the federal budget.

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