23/06/2025
Budget 2025–26: Key Tax Changes – Comparative Summary
The FY 2025–26 budget introduces several tax reforms aimed at expanding the tax base, meeting IMF requirements, and offering relief to salaried individuals:
💵Income tax (salaried class):
Relief has been introduced for individuals earning between Rs. 600,000 and Rs. 3.2 million. New tax slabs significantly reduce rates, with income between Rs. 600,000 and Rs. 1.2 million now taxed at just 1%, down from 5%.
💰Interest income:
The tax rate on interest income has been increased from 15% to 20% for filers. Non-filers face an even higher rate of 35% on certain instruments.
🌾Agricultural income:
Previously under-taxed or exempt, agricultural income is now fully taxable up to 45% to align with IMF-driven reforms.
🏘️Property taxation:
Advance taxes on property transactions remain unchanged. However, enforcement against non-filers has been significantly strengthened.
🚘Vehicle and withholding taxes:
Withholding taxes on automobile transactions and conventional vehicles have been increased. A new 3 to 5 percent levy on conventional vehicles has been introduced to support electric vehicle adoption.
💸Cash vs digital transactions:
Cash-based purchases will be subject to higher GST at 20%, compared to 18% for digital payments. Additionally, a Rs. 2 per liter surcharge will apply to fuel purchased using cash.
Revenue measures:
The FBR’s tax collection target has been raised to Rs. 14.1 trillion, up from Rs. 12.9 trillion. The government aims to expand the tax base using digital enforcement, artificial intelligence, and stronger compliance measures.
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