As Pakistan finalizes its Budget for 2025–26, discussions with the International Monetary Fund (IMF) continue, focusing on a range of tax measures intended to strengthen revenue without hindering economic sectors.
Government officials have indicated that a reduction in taxes on automobiles and their parts is under consideration. The current 2% additional customs duty on auto parts may be removed entirely, while existing customs duty rates—ranging from 4% to 7%—could be gradually lowered. Duties on vehicles, which currently lie between 15% and 90%, may see a 20% cut.
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Efforts are also underway to boost industrial growth and exports, with a target increase of $5 billion. To support this goal, authorities are likely to ease taxes on raw materials used in sectors such as textiles, plastics, chemicals, iron, steel, and auto parts. A similar reduction in duties on semi-finished goods is being planned to reduce production costs.
In a move aimed at easing real estate activity, the government is expected to reduce the withholding tax on property transactions by 0.5%.
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For the coming fiscal year, the Federal Board of Revenue (FBR) has been assigned a collection target of Rs 14.305 trillion. Around Rs 600 billion is projected to come from stricter enforcement, while Rs 400 billion is expected through fresh policy steps.
Moreover, taxation on agricultural income may be introduced starting July 1, 2025. Meanwhile, the IMF continues to stress the importance of expanding the tax base and bringing more sectors into the documented economy.