The federal budget for 2025–26 is beginning to take shape, with early details revealing key proposals focused on environmental policy, energy, industrial development, and tax reforms.

Sources in the Ministry of Finance indicate that the government is crafting a series of fiscal measures aimed at narrowing the budget deficit and ensuring economic stability.

A key proposal includes the introduction of a 2.5% carbon levy, aimed at tackling environmental pollution while boosting government revenue.

The petroleum levy is also in focus, with a revenue target of Rs1,300 billion. The government plans to gradually increase the levy from Rs78 to Rs80 per liter.

The development budget is set to include Rs1,000 billion for federal development projects and Rs355 billion specifically for state-owned enterprises. To ease the burden on the public, the government plans to allocate Rs1,186 billion for subsidies.

Efforts to broaden the tax base include new tax initiatives targeting YouTubers, freelancers, and non-filers. Tax enforcement for retailers will also be strengthened. Non-filers may face an increase in the General Sales Tax (GST) rate from 18% to 20%.

Further fiscal adjustments under consideration include a reduction in additional regulatory duties on over 3,500 imported items, and a 2% to 3% cut in customs duties.

To support industrial growth, the government is weighing the option of reducing or eliminating the withholding tax on raw material imports for industries.

Read more

Budget 2025-26: Defense development projects to get Rs11.55 billion

IMF rejects Pakistan’s proposal to tax gold, cash, other movable assets

Govt likely to increase tax on immovable properties’ purchase

The budget also outlines a phased reduction in super tax for large corporations.

Companies with annual profits of up to Rs150 million may be exempt, while those earning Rs200 million and Rs250 million could be subject to 0.5% and 1.5% super tax rates, respectively. However, companies with profits exceeding Rs300 million will continue to pay a 4% super tax.

While the overall super tax structure for the corporate sector is expected to remain largely unchanged, the government is also considering reducing the withholding tax on raw materials used in the construction sector, aiming to stimulate growth in that industry.