Summary of Budget Speech 2025-2026

Finance Budget 2025-2026

Proposed Important Amendments in Pakistan Tax Laws

 

1. Sales Tax Act, 1990

• A new definition of “abettor” is added in the tax fraud and it means misuse of FBR’s portal

of any registered person by any unauthorized person involved in issuance of fake sales tax invoices or input adjustment

• A new definition of “Cargo tracking system” is added, which means a digital system

notified by FBR for electronic monitoring and tracking of goods within and outside Pakistan.

• Another new definition of “E-Commerce” is added, which means sale and purchase of

goods and services through computer networks or mobile apps having digital ordering features.

• A definition of “Payment intermediary” is added, which means banking company that

facilitates the transfer of the funds between two or more parties to enable settlement payments between two parties.

• The definition of Retail price is amended for Carbonated waters beverages, mineral water

and fruit juices. As per new definition, the maximum 5% chilling charges are allowed for deduction against price goods actually sold to the general body of consumers inclusive of Sales tax and FED.

Further,  FBR may fix the retail price of any goods specified in Third Schedule.

For all imported goods falls in 3^rd schedule, the retail price shall not be less than 130% of the Custom assessed value including duty & taxes.

• All e-commerce transactions shall be subjected to 2% Sales Tax to be collected by

‘Payment Intermediaries (banks)’. No input adjustment shall be allowed.

• All distributors / wholesaler involved in the purchase of goods from manufacturers and advance tax u/s 236G is being deducted on their purchases, now the tax officer may register such distributor/ wholesaler for sales tax and assess the sales tax liability by assessing value addition on any reasonable basis.

• Now the time limitation of passing the order against show cause notice has been extended from 120 days to 180 days by tax officer.

• Now the commissioner has power to stop following transactions of any unregistered person:

o  Banks accounts operations.

o  Property Transfers

o  Seal the business premises

• Now the limitation of sales to unregistered person by PKR. 10 million in a month and PKR.100 million in a financial year has been abolished.
• Sales Tax on Locally manufactured or assembled motorcars of cylinder capacity upto [850CC] has been increased from 12.5% to 18% percent

Income Tax Ordinance, 2001

• Now restriction has been imposed on claim of revenue expenditures against purchases from persons not having NTN in excess of 10 percent of total expenditure i.e. COGS and admin & selling expenses. Except agriculture produce purchase from growers.

• Now every taxpayer has to receive payments against sale invoices above PKR. 200,000/- via banking channel or digital means, otherwise 50% of the expenditure claimed against these cash sales shall be disallowed.

• No depreciation will be allowed on addition of fixed assets, if withholding tax has not been deducted on purchase of said capital asset.

• All e- commerce transaction through banking channel or cash on delivery are now subject to Income tax at the rate range 0.25% to 2%. This shall be final tax.

• Rental income from commercial properties may be determined by commissioner at the rate of 4% of the fair market value of the property, unless proper registered rental agreement is produced to the commissioner.

• A person who has not sufficient funds in his wealth statement and is non-filer or having no NTN, can’t perform following transaction

o  Booking, purchase or registration of any motor vehicles in his name. o  Registration, attestation or transfer of any immovable property. o  Sale or purchase share in stock exchange or mutual fund.

o  Open a bank account or saving account or portfolio account except Asaan account or pension account.

• Exchange of Banking and Tax information: Now FBR and Banking companies may share information of turnover for one or more tax years and income tax returns, wealth statements, financial statements or any other documents in respect of any person or class of person.

• The rate of withholding tax on cash withdrawal has been enhanced from 0.6% to 0.8%.
• Tax on Salary Income

o  Upto 600,000 Salary @ 0% (earlier 0%)

o  600,000 to 1200,000 @ 1% (earlier 5%)

o  1200,000 to 2200,000 @ 11% (earlier 15%) o  2200,000 to 3200,000 @ 23% (earlier 25%) o  3200,000 to 4100,000 @ 30% (earlier 30%) o  Above 4100,000 35%

o  Surcharge for salary above 10 Million reduced from 10% to 9%

• Super Tax on business income under section 4C, 0.5% reduction on every Slab
• Advance Tax on Sale of Immovable property has been increased:

o  Up to PKR. 50 million [from 3% to 4.5%]

o  From PKR. 50 Million to PKR. 100 million [from 3.5% to 5%] o  Above PKR. 100 million [from 4% to 5.5%]

• Advance Tax on Purchase of immovable property has been reduced:

o  Upto PKR. 50 million [from 3% to 1.5%]

o  From PKR. 50 Million to PKR. 100 million [from 3.5% to 2%] o  Above PKR. 100 million [From 4% to 2.5%]

• Any pension received from private or government institution shall be taxable for Tax Year

• Withdrawal from Personal Pension Fund opened with Investment Bank (AMC) is now 100% taxable i.e. exemption upto 50% has been abolished.

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