12/06/2026
*Salaried Class Relief*
The government is reducing income tax rates across four salary slabs. For earners between PKR 22–32 lakh annually, the rate drops from 23% to 20%. For the PKR 32–41 lakh bracket, it goes from 30% to 25%. The PKR 41–56 lakh bracket sees a cut from 35% to 29%, and the PKR 56–70 lakh bracket moves from 35% to 32%. The annual surcharge on salaried individuals is also being fully abolished — it was reduced from 10% to 9% last year and is now eliminated entirely.
*Super Tax Reduction*
The super tax rate on business income above PKR 50 crore is being cut from 10% to 8%, across all four income slabs applicable to businesses. However, the existing surcharge on banks, oil & gas exploration companies, and fertilizer companies remains in place.
*Construction Sector*
To stimulate construction, the sales tax on wholesale building materials is being reduced from 2.5% to 1.25%, and on retail from 5.5% to 2.75%.
*IT & Export Sector Relief*
The income tax on IT export earnings is being reduced to 0.25%. The FTR (Final Tax Regime) concession for IT, which was set to expire on 30 June 2026, is being extended to 30 June 2029. The Export Development Surcharge of 0.25% is being fully abolished, and the Export Facilitation Scheme markup is being reduced to 4.5% with the refund period extended from 9 to 18 months.
*Small Retailers — Fixed Tax System*
A new Fixed Tax System under Section 99B is being introduced for small retailers with annual sales of PKR 10 crore or less. They pay 1% of annual sales as tax, can adjust input withholding tax, need no POS machine, and receive a green-card QR code for verification. A single-page brochure in Urdu and regional languages will explain the scheme.
*Federal Excise Duty (FED) Changes*
FED is being levied on petroleum-based solvents (white spirit, petroleum naphtha, mineral turpentine oil) currently at only PKR 80/unit — these are used for fuel adulteration. FED on SUVs above 2000cc–3000cc is increasing, along with a PKR 2 crore FED on luxury EVs above 3000cc. Business-class international travel FED for privileged classes is being abolished.
*Other Measures*
The withholding tax on international credit/debit card transactions is being reduced from 5% to 0.5% per transaction to encourage formal financial channels. The Capital Value Tax on holding foreign assets is being eliminated to encourage Pakistanis to declare overseas assets and improve documentation. Sales tax on sanitary pads and contraceptives is being fully abolished. The sales tax Third Schedule is being expanded to include FMCG categories to curb under-invoicing. Non-registered suppliers will now trigger withholding tax obligations on buyers (individuals and AOPs). Penalties are being inflation-adjusted for the first time in seven years, and digital integration fines are also proposed.
*FBR New Operating Model*
A National Faceless Centre is being established to separate discretionary and non-discretionary tax functions. All audits and assessments will operate in Single Blind and Double Blind modes — officers won't know the taxpayer's identity, and case assignment will be algorithmic. An Algorithmic Settlement Mechanism with a Central Data Hub will automate discrepancy detection and settlement via the IRIS portal, removing human intervention from the process.
*Revenue & Macro Targets*
FBR's gross revenue target for FY27 is PKR 15,264 billion (up 17.6% YoY), with a non-tax revenue target of PKR 5,336 billion. The fiscal deficit target is 3.6% of GDP, GDP growth is projected at 4%, and average inflation is expected around 8.2%.
