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Tax on oil reaches Rs1.68 trillion; taxes lowered for workers and property owners.
BY Mahnoor | 13-06-2026
ISLAMABAD: The government announced it wants to collect Rs17 trillion in taxes this coming year. This includes Rs1.7 trillion from fuel taxes. To help boost the economy, the government is giving Rs360 billion in tax breaks to workers, businesses, and real estate owners.
Specifically, workers get Rs52 billion in relief, and the real estate sector gets Rs115 billion. Additionally, a new tax of 30% will apply to electric vehicles worth up to Rs30 million, and a 40% tax will apply to those worth more than Rs30 million.
The government also added a 5% tax on social media income and banned buying expensive items if the buyer cannot prove they earned enough money to pay for them. Hybrid cars now have an 18% sales tax.
To reach a total tax goal of Rs15.264 trillion, the government added Rs306 billion in taxes and used Rs354 billion for collection efforts. Specific goals include Rs1.68 trillion from fuel levies, Rs50 billion from climate taxes, and Rs22.8 billion from electric vehicle taxes.
Some new rules aim to boost the economy, such as removing or lowering taxes on 1,914 different imported items. The government also plans to lower taxes on 3,125 other items, including removing a 5% customs duty.
Mohammad Ashfaq, a commerce official, said that lowering import taxes has provided 180 billion rupees in relief. This is part of a national plan to reduce the average import tax rate from 17.12% to 13.56%.
The government presented the 2026-27 Finance Bill to parliament, which includes Rs306 billion in new taxes to help the FBR reach its target of Rs15.264 trillion.
Unlike last year, the IMF now requires the government to meet these tax targets; if they fail, they must ask the IMF for special permission. Additionally, the central government’s funding from provinces (Rs1.035 trillion) will now depend on how well the FBR collects taxes.
For the first time, four provinces have agreed to give Rs1.035 trillion to the FBR, based on a total tax goal of Rs15.264 trillion. If the tax goal is not met, the money given to the FBR will decrease automatically.
The government is using these steps to collect at least Rs2.5 trillion from the slow economy to hit its new tax target, which is 17% higher than last year.
Tax on your earnings
The government is providing Rs52 billion in tax relief to salaried workers. For those earning up to Rs267,000 a month, the tax rate has dropped from 23% to 20%. For those earning up to Rs341,000, the rate is now 25%, affecting 160,000 people.
For monthly incomes up to Rs467,000, the tax is 29%, and for up to Rs583,000, it is 32%. For anyone earning more than Rs583,000 a month, the tax rate is 35%. These changes will save a high-income earner about Rs257,000 in taxes every year.
FBR member Hamid Ateeq Sarwar stated that new tax categories have been added. The limit for the highest 35% tax rate has risen from Rs4.1 million to Rs7 million per year. The government also removed a 9% extra tax on incomes over Rs10 million.
Additionally, following a court ruling, the government plans to stop taxing estimated income from property.
Sarwar stated that the super tax is gone for people earning up to Rs500 million. For those earning more than Rs500 million, the tax rate dropped from 10% to 8%. These changes do not include the banking, oil, or fertilizer industries.
Dr. Najeeb Memon, a tax official, also noted that taxes on buying and selling property have been lowered. He explained that instead of multiple rates, a single tax rate of 2.75% is proposed, down from the old 5.5% rate.
Dr. Sarwar stated that the property tax has dropped from 2.5% to 1.25%. This change aims to encourage legal paperwork and make real estate deals easier. However, sources say the IMF disagrees with this tax cut, and the government is still talking with them.
Additionally, the tax on export money has decreased from 0.75% to 1.25%, and a low tax rate for IT exports will stay for three more years. Finally, the tax on foreign payments made with cards has been cut from 5% to 0.5%.
It is suggested that sellers making over Rs200 million can claim back the tax paid on e-commerce sales.
Also, to encourage digital record-keeping, a 10% tax credit will be given for spending on technology to connect with the FBR’s systems.
Certain charities and welfare groups, such as the Pakistan Red Crescent Society, Shaheen Foundation, Bahria Foundation, SIUT, and Dawat-e-Hadiya, no longer have to pay income tax.
Additionally, the government has removed the 1% tax on owning foreign property or assets.
The tax for wholesalers and distributors has doubled to 0.5%. Small traders no longer have to pay withholding tax if they earn up to Rs200 million, up from Rs100 million.
The government raised the minimum income tax for courier, logistics, staffing, oil drilling, and transport services from 6% to 7%. However, the tax on port and LNG terminal services was lowered by 3% to 12%.
The government has added a tax on certain life insurance schemes to stop people from using them unfairly for profit.
Also, a 5% tax will now be taken from money earned on social media. Banks will deduct this tax before paying creators on platforms like YouTube, Facebook, Instagram, and TikTok.
The government has also raised the import tax for business owners from 1% to 3% and from 2% to 6.5%. Additionally, a new 3% sales tax has been added to these services.
Import tax
Under the new National Tariff Policy (2025-30), the government is providing Rs180 billion in relief by lowering import taxes.
For 92 types of industrial goods, customs duties have been reduced across various levels, and the 5% tax rate has been removed. Additionally, the government has lowered extra customs duties on many products, reducing them from 6% to 4% and from 4% to 2%, while completely removing the 2% extra tax on 569 specific items.
Similarly, it simplified the taxes on 1,914 product categories. Mohammad Ashfaque stated that the 50% tax on 359 categories has been cut to 20%.
Additionally, the tax on 1,347 categories was reduced by 20%. For 208 categories, the lower tax rates of 2.5%, 2%, and 1% were either cut by 20% or removed entirely.
The government has removed taxes on essential ingredients used to make cancer medicines. It also cut the tax on special construction vehicles from 20% to 10%.
Additionally, taxes on defense imports and bombproof vehicles for the SCO summit have been completely removed.
Tax on sales
The government has removed sales tax on magazines and reduced taxes on certain aircraft parts imported or leased by PIA. It also stopped the 18% tax on sanitary pads and contraceptives.
Additionally, the 18% tax on shipping and certain refineries has been canceled. To raise Rs50 billion, the government moved 21 common items, like packaged milk, to a new tax category where they will be taxed based on their market price.
It also added a 3% sales tax on raw materials that companies import.
The central bank of the United States
The government has cut taxes on business class flights. For trips to the Americas, the tax dropped by 84% to Rs50,000. For the Middle East, it is now Rs25,000, and for the rest of the world, it is Rs40,000.
Additionally, the tax on importing acetate tow will drop from Rs44,000 to Rs10,000, and taxes have been removed from healthy sports or electrolyte drinks that meet WHO standards.
The government has extended tax exemptions on imported electric vehicle parts for one more year.
However, the tax on e-liquid for electronic cigarettes has risen from Rs10,000 to Rs16,500 per kg, replacing a previous 65% retail price tax. New luxury taxes apply to electric vehicles: 30% for those priced between Rs20 million and Rs30 million, and 40% for those above Rs30 million. Additionally, a 70% duty applies to vehicles with 2,000cc to 3,000cc engines, while gas-powered vehicles over 3,000cc will face an 81% duty.
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