The National Assembly on Tuesday approved the federal budget worth over Rs18.7 trillion through a majority vote, formally adopting the Finance Bill 2026-27 after a lengthy sitting. The government stated that the measures aim to broaden the tax base, increase compliance, and restructure key sectors for the upcoming fiscal year.
Revised Income Tax Slabs for Salaried Individuals
According to the Finance Bill 2026-27, revised income tax slabs have been introduced for salaried individuals. Those earning up to Rs600,000 annually remain exempt, while higher income brackets are taxed progressively, with rates rising up to 35% for annual incomes above Rs7 million. New levies and exemptions also apply to corporate entities, property transactions, and digital income streams, including earnings from social media platforms.
Changes in Property and Corporate Taxation
The legislation introduces changes to property taxation, including advance taxes on both buyers and sellers, alongside new withholding tax provisions on digital earnings. Significant amendments were approved for corporate taxation, with revised rates for banking, fertiliser, and large corporate sectors depending on income thresholds. Import duties on vehicles have been adjusted, with reduced tax burdens on certain engine capacities and higher duties on selected imported electric vehicles based on value brackets.
Taxation in Agriculture and Industrial Sectors
In the agriculture and industrial sectors, income above specified thresholds will now be taxed at revised flat rates. Exemptions have been granted to selected welfare and charitable institutions, including the Pakistan Red Crescent Society and other named organisations.
Stricter Enforcement and Digital Tax Monitoring
The House approved stricter enforcement measures for tax compliance, including heavier fines for non-filers and individuals failing to comply with Federal Board of Revenue (FBR) notices. Penalties of up to Rs1 million for first violations and Rs2 million for repeat offences have been introduced. The legislation strengthens digital tax monitoring, making electronic filing of income tax returns mandatory through the FBR’s online system, while also introducing penalties, including imprisonment, for tampering with monitoring systems.
