Budget 2025–2026: Government considers lowering car taxes and may do away with the 2 percent duty
The International Monetary Fund (IMF) is currently consulting with Pakistan as it develops its Budget 2025–26 on a number of tax suggestions meant to increase revenue while bolstering important economic sectors.
Official sources claim that the government is thinking about lowering taxes on automobiles and auto parts. It may be possible to eliminate the present 2% extra customs fee on parts. Additionally, there are plans to progressively lower customs duty slabs between 4% and 7%.
A 20% drop in present duties, which currently vary from 15% to 90%, is being discussed for autos.
The government is expected to lower taxes on raw materials used in a variety of industries, such as textiles, chemicals, auto parts, plastics, iron, and steel, in order to promote industrial growth and boost exports by up to $5 billion. There are also plans to lower levies on semi-finished items and industrial raw materials.
It is also anticipated that the withholding tax on real estate transactions will be lowered by 0.5%.
The Federal Board of Revenue (FBR) has set a tax revenue target of Rs 14.305 trillion for the upcoming year. It is anticipated that increased enforcement of current regulations will account for Rs 600 billion of this, while new policy initiatives will account for another Rs 400 billion.
According to several sources, agricultural income taxes are scheduled to start on July 1, 2025.
In order to achieve sustainable revenue growth, the IMF is advising Pakistan to increase the scope of its tax base and document more aspects of the economy.
