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Budgets

Pakistan's Budget 2025-26: New Tax Measures and Revenue Targets

Strategic Insights

— 2 min read

The Pakistani government has unveiled a Budget 2025-26, introducing stringent taxation and enforcement measures to generate an additional Rs670 billion in revenue. The Federal Board of Revenue (FBR) has implemented several changes, including higher withholding taxes on services, e-commerce, and digital platforms, as well as a 10 percent GST on erstwhile Fata/Pata areas. The government has also reduced property purchase tax by 1.5 percent while increasing seller tax rates and abolishing the Federal Excise Duty (FED) on property transactions.

Key Takeaways:

  • The government aims to generate an additional Rs670 billion in revenue through new taxation measures and enforcement efforts.
  • The FBR has introduced higher withholding taxes on services, e-commerce, and digital platforms, including online shopping.
  • A 10 percent GST has been imposed on erstwhile Fata/Pata areas, while a 18 percent GST now applies to solar panel imports.
  • Tax rates on interest income, cash withdrawals, and 850cc vehicle purchases have been increased.
  • New taxes target high-income pensioners, with restrictions on property and vehicle purchases for ineligible persons.
  • The government has reduced property purchase tax by 1.5 percent while increasing seller tax rates and abolishing the Federal Excise Duty (FED) on property transactions.
  • The FBR has proposed withdrawal of GST exemptions and slapped 10 percent tax to fetch an additional Rs35 billion.
  • The tax on interest income has increased from 15 percent to 20 percent, projected to bring in Rs50 billion.
  • Dividend taxes have also been raised to 25 percent, with mutual funds taxed at 15 percent.
  • Pension income exceeding Rs10 million will now be taxed at 5 percent, while amounts below this threshold remain exempt.
  • The cash withdrawal tax for non-filers has risen from 0.6 percent to 0.8 percent.

Statistics:

  • The government aims to generate an additional Rs670 billion in revenue through new taxation measures and enforcement efforts.
  • The FBR has set an ambitious Rs14.131 trillion tax collection target for the upcoming fiscal year, a significant jump from the revised Rs11.9 trillion estimate for the current fiscal year.
  • The government has proposed increasing tax rates on all services and jacking up Withholding Tax rate from 11 to 15 percent.
  • The services tax on companies has increased from four to eight percent, especially on architects.
  • The FBR has imposed an 18 percent GST on digital ecommerce platforms like Temu to protect local retailers.
  • The cash withdrawal tax for non-filers has risen from 0.6 percent to 0.8 percent.
  • The government has proposed withdrawal of GST exemptions and slapped 10 percent tax to fetch an additional Rs35 billion.

Sources:

  • "Pakistan's Budget 2025-26: New Tax Measures and Revenue Targets" (Dawn)
  • "Pakistan's Federal Budget 2025-26 Seeks Rs670 Billion Additional Revenue" (The Express Tribune)
  • "FBR's proposed changes in Income Tax Ordinance 2001" (Pakistan Today)
  • "Pakistan's Tax Rates for FY 2025-26: A Guide" (Business Recorder)
  • "Pakistan's Sales Tax Rates for FY 2025-26: A Guide" (Business Recorder)
  • "Pakistan's GST Reforms: A Review" (Business Recorder)
  • "Pakistan's Tax Amendments for FY 2025-26: A Brief" (Pakistan Today)

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