KARACHI – Massive tax cuts are coming in Budget 2025-26, bringing a sigh of relief for Pakistanis who are bearing the brunt of massive taxes.
Sources familiar with the development said the Pakistani government is expected to roll out some reforms, with key proposals including the removal of withholding tax on raw materials — a move aimed at providing substantial relief to Pakistan’s struggling industrial and construction sectors.
PM Sharif instructed relevant ministries to consult with industry stakeholders to ensure that the reforms directly address the challenges faced by the business community. Officials believe that eliminating the withholding tax on essential raw material imports will significantly lower production costs and reduce the backlog of tax refunds, boosting overall industrial activity.
The government is also evaluating tax incentives for real estate sector. Plans are under discussion to abolish both the withholding tax on property transactions and the federal excise duty on property sales — steps intended to revive investor confidence and stimulate property market activity.
In light of proposals, a special consultation session is scheduled with the International Monetary Fund (IMF) to ensure that the new tax measures align with Pakistan’s broader economic and fiscal policies. Officials aim to convince the IMF that these reforms are vital for revitalizing economic growth while maintaining financial discipline.
Meanwhile, the country’s telecom sector is actively pushing for relief as well. Industry leaders are urging the government to reduce the withholding tax rate on telecom services from 15% to 8% to promote digital access and innovation.
Other proposals under consideration include a 2.5% reduction in income tax rates for salaried individuals, forming part of a wider strategy to offer relief amid rising inflation and economic pressures.
As Budget 2025 approaches, anticipation is high among industry leaders and taxpayers alike, with hopes that these changes will pave the way for a more business-friendly and growth-oriented fiscal environment.
Pakistanis earning under Rs50,000 to get ‘Full Tax Exemption’ in Budget 2025–26
