As Pakistan prepares its Budget for the fiscal year 2025–26, ongoing discussions with the International Monetary Fund (IMF) focus on a range of tax proposals designed to enhance revenue generation while supporting vital economic sectors.
Official sources indicate that the government is considering lowering taxes on automobiles and their components. The current 2% additional customs duty on auto parts may be removed entirely, and customs duty slabs ranging from 4% to 7% could be gradually reduced.
Read more: Govt to Slash Import Taxes by Rs120 Billion in Pro-Business Budget Push
For vehicles, a potential 20% cut in existing duties—currently between 15% and 90%—is under review.
To stimulate industrial expansion and increase exports by up to $5 billion, the government is also likely to slash taxes on raw materials essential to industries such as textiles, chemicals, plastics, auto parts, iron, and steel. Duties on semi-finished goods and industrial inputs may also be lowered.
In the real estate sector, a reduction of 0.5% in the withholding tax on property transactions is expected.
The Federal Board of Revenue (FBR) has been given a proposed tax collection target of Rs 14.305 trillion for the upcoming fiscal year. Of this, Rs 600 billion is projected to come from better enforcement of existing tax laws, while Rs 400 billion will stem from new policy initiatives.
Moreover, sources disclose that taxation on agricultural income is scheduled to commence on July 1, 2025.
The IMF continues to press Pakistan to expand its tax net and formalize more sectors of the economy in order to ensure long-term revenue sustainability.
