ISLAMABAD – As Pakistan gears up to unveil federal budget for fiscal year 2025-26, Pakistani government is set to introduce several new taxation measures aimed at boosting revenue by around Rs 200 billion.
Key Tax Proposals expected in Budget 2025-26
Sales Tax on Solar
To widen the tax base, an 18 percent sales tax is likely to be imposed on imported solar panels, marking a significant step towards taxing renewable energy equipment.
Sales Tax on E-commerce
Amid rapid growth of online business, e-commerce transactions are expected to face an 18 percent sales tax, bringing the digital economy under formal taxation.
Removal of Exemptions
Sharif led government plans to eliminate several items from the current exemption lists (Sixth and Eighth Schedules), which will likely increase sales tax on many products currently enjoying lower or zero rates.
Tax Relief on Medicines
In a positive move for healthcare, certain critical medicines and cancer treatment equipment will be added to the tax exemption list to reduce the cost burden on patients.
Expansion of Sales Tax on Services
The scope of sales tax will be broadened to include more services within Islamabad and the federal capital territory.
Sales Tax on Goods from Former Tribal Areas
Goods manufactured in erstwhile tribal regions are set to face an 18 percent sales tax.
Updated Taxation on Imported Goods
The Sales Tax Act’s Third Schedule will be expanded to include items like imported chocolates, coffee, and cereals, which will now be taxed based on their retail prices.
New Federal Excise Duty on Processed Foods
A 5 percent excise duty is being considered on a wide range of processed foods, including frozen items, chips, soft drinks, instant noodles, ice cream, biscuits, frozen meat, sauces, ready meals, and sausages.
Sales Tax on Unregistered Taxpayers
To ease compliance, the additional 4 percent sales tax currently imposed on unregistered taxpayers may be removed.
These tax proposals form part of the government’s strategy to increase revenues and manage the country’s fiscal deficit ahead of the official budget announcement.
The final budget is set to be announced on Tuesday, with details of these new tax measures likely to shape Pakistan’s economic landscape in the coming year.
Economic Survey 2024-25: Pakistan misses growth targets but shows fiscal improvement
