Islamabad / Lahore / Karachi, JUN 12 /DNA/ – Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), has acknowledged the presentation of the Rs. 18.7 trillion Federal Budget 2026-27, commending the government’s efforts toward macroeconomic stabilization – while urging a stronger transition toward sustained economic and industrial growth.
Mr. Atif Ikram Sheikh, addressing the business community and media in a post-budget session today, the President of FPCCI congratulated Prime Minister Mian Muhammad Shehbaz Sharif and the government’s economic team on their fifth consecutive federal budget – noting that it reflects a vital continuity of economic policy.
Mr. Atif Ikram Sheikh said that Pakistan’s economy has shown encouraging signs of stability; with GDP growth improving to 3.7%, the fiscal deficit reducing to 0.7% of GDP, and public debt servicing costs declining by 23% – the economy has undeniably moved toward fiscal discipline. However, the Federal Budget is not merely a statement of revenue and expenditure; it is a critical policy document that must dictate our transition from sheer stabilization to robust economic growth, he added.
Welcomed Relief and Accepted Proposals
Mr. Atif Ikram Sheikh expressed appreciation that several of its key recommendations were incorporated into the budget, signaling a partial shift toward a “Growth-Driven Model.” Key budget measures welcomed by the business community include:
● Tax Relief: The abolishment of the Capital Value Tax (CVT) on foreign assets and the elimination of the Federal Excise Duty (FED) on international business class travel.
● Super Tax Reforms: The abolishment of the Super Tax on six slabs up to Rs. 500 million, a reduction from 10% to 8% for incomes exceeding Rs. 500 million, and a complete waiver for exporters.
● Salaried Class Support: The elimination of the surcharge on salaried individuals and considerable reductions in tax rates across all slabs.
● Sector-Specific Incentives: The extension of the 0.25% final tax exemption on IT exports until June 2029, and the reduction of Withholding Tax (WHT) for filers in the construction sector by 50% (from 2.5% to 1.25% on purchase, and 5.5% to 2.75% on sale).
● Retail Digitalization: A new 1% fixed sales tax scheme for retailers with annual sales under Rs. 200 million, exempting them from POS machines and routine audits via a green QR code system.
● Exporter Relief: A revised 1.25% Minimum Tax for exporters, replacing the previous 1% Minimum and 1% Advance Tax structure.
Core Economic Concerns and Unaddressed Proposals
Mr. Atif Ikram Sheikh maintained that, despite the positive indicators, FPCCI highlighted significant concerns regarding the overarching economic environment. The Investment-to-GDP ratio remains stagnant at 14.38%, and the savings rate has declined to 14.13%. Most alarmingly, urban poverty has surged from 11% to 17%, reflecting a significant downturn in core business activities.
Mr. Atif Ikram Shikh voiced strong reservations regarding the Federal Board of Revenue’s (FBR) aggressive tax collection target of Rs. 15.2 trillion (a 17% increase) and the petroleum levy target of Rs. 1.7 trillion (an 18% increase). The Federation warned that these targets risk further fueling inflation amid already high international oil prices.
Furthermore, several critical FPCCI proposals designed to spur industrialization and export competitiveness were notably absent from the budget speech, including:
● Restoration of the Final Tax Regime (FTR) for exporters.
● Reductions in the corporate tax rate and turnover tax under Section 113.
● Elimination of the Minimum Tax Regime and Further Tax.
● Withdrawal of the repeal of Section 8B of the Sales Tax Act.
● Broader systemic digitalization of the economy.
Next Steps and Comprehensive Review
Mr. Atif Ikram Sheikh highlighted that the proposed measures give mixed signals regarding the support for sustained industrialization, job creation, and higher economic growth,” the President noted. “The next phase of reforms must hyper-focus on productivity enhancement, export diversification, and lowering the cost of doing business.
The FPCCI considers it premature to issue a final assessment of the budget at this stage. Over the next 48 hours, the Federation will conduct a comprehensive review of the Finance Bill in consultation with member chambers, trade associations, and key stakeholders across the country. A detailed response outlining the business community’s complete observations and recommendations will be issued subsequently.
The FPCCI remains committed to constructive engagement with the government to build a stronger, more competitive, and prosperous Pakistan.
