• Income tax rates reduced for salaried individuals earning between Rs2.2m. Rs7m annually; 35pc slab threshold raised to Rs7m• Super tax abolished for incomes up to Rs500m; advance taxes on property transactions and foreign card payments reduced• Customs duties cut on 92 tariff lines; sales tax relief extended to sectors including EVs, shipping, refineries and magazines
ISLAMABAD: The government has unveiled a sweeping package of tax. tariff reforms, offering relief to higher-income salaried individuals and businesses by rationalising income tax, sales tax, and customs duties, while promoting documentation, digital compliance, and investment.
The measures are designed to ease the burden on households. enterprises while targeting key sectors such as real estate, IT, shipping, energy and capital markets, and at the same time promoting documentation, digital compliance and investment.
The income tax slabs have been eased, super tax rationalised, excise duties cut,. sales tax exemptions widened to cover magazines, shipping, and refineries, while levies on deemed income and the tampon tax have been removed.
Excise duty on business class international travel has been drastically reduced in the budget, with the levy on tickets to North, Central,. South America cut to Rs50,000 from Rs350,000. Rates for tickets to the Middle East. Africa have been reduced to Rs25,000 from Rs105,000, while business-class travel to Europe now costs Rs40,000 instead of Rs210,000. The same reduction applies to tickets for the Far East. Australia, where the duty has been brought down to Rs40,000 from Rs210,000.
The government has restructured income tax slabs for higher salaried taxpayers, lowering rates. raising the threshold for the 35 per cent bracket from Rs4.1 million to Rs7m. Relief will be provided to the four middle bands (Rs2.2m to Rs7m), while the top slab will stay at 35pc. The total impact of this relief for the high-end salaried class was estimated at Rs830.5m.
The exemption threshold will remain unchanged at Rs600,000 annually. while those earning up to Rs1 million a year will continue to face a token 1pc tax.
Under the new structure, those earning between Rs2.2m and Rs3.2m will face a reduced tax rate of 20pc.
For incomes between Rs3.2m and Rs4.1m, the rate has been cut from 30pc to 25pc. Taxpayers earning Rs4.1m to Rs5.6 m annually will see their rate drop from 35pc to 29pc. while those in the Rs5.6m to Rs7m range will have their rate reduced from 35pc to 32pc.
In addition to these tax reductions, the government has proposed abolishing the surcharge on salaried taxpayers. To further support the salaried class. salaries of serving government employees will be increased by 7pc, with pensions also rising by 7pc. Moreover, the minimum wage is set to be raised by 10pc.
As part of the real estate facilitation measures. the government has abolished the tax on deemed income from capital assets located in Pakistan. It has also proposed a reduction in advance tax on the sale and purchase of immovable property. The advance tax rate for sellers or transferors under Section 236C. previously ranging from 4.5pc to 5.5pc, has been reduced to a flat rate of 2.75pc.
Similarly. the advance tax on property purchases under Section 236K, which previously ranged from 1.5pc to 2.5pc, has been reduced to a uniform 1.5pc. These changes are aimed at encouraging documentation and making transactions in the real estate sector more convenient.
Moreover, the government abolished capital value tax on foreign movable and immovable assets of resident Pakistanis. The law has been clarified regarding the determination of the cost basis of inherited immovable property. the tax treatment of family settlements after death.
The super tax has been abolished for persons with an income of up to Rs500m,. the rate has been reduced from 10pc to 8pc for persons with an income of more than Rs500m. However, these concessions do not apply to banking, exploration and production and fertiliser sectors.
Tax collection on export proceeds (1pc withholding tax. 1pc advance tax) has been reduced from 2pc to 1.25pc in order to encourage exports. The reduced tax rate of 0.25pc for exporters of IT. IT-enabled services has been extended from 2026 up to the tax year 2029.
For foreign payments through cards, the advance tax on foreign remittances made through debit, credit,. prepaid cards has been reduced from 5pc to 0.5pc. Moreover, tax deducted on e-commerce transactions shall be adjustable for sellers having a turnover exceeding Rs200m.
A tax credit equal to 10pc of the investment made in electronic resources for integration with the Federal Board of Revenue’s (FBR) computerised systems has been introduced to facilitate documentation. digital compliance. Advance tax on payments for foreign television plays and advertisements has been withdrawn.
The FBR proposed an exemption from income tax for qualifying Special Purpose Vehicles established for asset-backed securitisation to facilitate capital market development. The turnover threshold for exemption from withholding tax for small traders has been increased from Rs100m to Rs200m.
It has been proposed that funds. eligible non-profit organisations that meet prescribed conditions will be entitled to exemption certificates for the whole financial year. Income tax exemption has been extended to specified charitable. welfare organisations, including Pakistan Red Crescent Society, Shaheen Foundation, Bahria Foundation, Sindh Institute of Urology and Transplantation and Dawat-e-Hadiya.
Sales tax relief measures
The budget also brings wide-ranging changes in sales tax. It grants sales tax exemption to magazines. extends relief on the import of CKD kits for electric vehicles (EVs) until June 30, 2027.
The scope of exemptions for aircraft parts imported. leased by Pakistan International Airlines Company Limited has been expanded, while exemptions have been introduced for strategic imports tied to the SCO summit and counterterrorism, as well as for capital goods needed to upgrade and overhaul refineries.
At the same time, the exemption on family planning devices has been withdrawn and the so-called ‘tampon tax’ abolished. Sales tax relief has also been offered to boost strategic investment in shipping, alongside the addition of a new entry in the Sixth Schedule. extension of the sunset date for EVs to June 30, 2027.
Customs relief measures
Under the National Tariff Policy (2025 30), the government introduces broad tariff rationalisation, cutting customs duties on 92 tariff lines: rates of 20pc, 15pc,. 10pc are reduced to 15pc, 10pc, and 5pc, respectively, while the 5pc slab has been abolished. The additional customs duty has also been eased, with rates lowered from 6pc to 4pc on 449 tariff lines, from 4pc to 2pc on 2,107 lines,. eliminated altogether on 569 lines.
Published in Dawn, June 13th, 2026
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