The federal government has proposed significant tax and duty reductions on imported vehicles, auto parts, and industrial raw materials in the FY2025-26 budget during talks with the IMF, according to official sources.
Key proposals include removing the 2% additional customs duty on auto spare parts and reducing existing duty slabs of 4–7%. A 20% cut in customs duties on vehicles—currently between 15% and 90%—is also being considered. The government aims to boost exports by $5 billion by cutting taxes on raw materials used in industries such as textiles, chemicals, plastics, and steel.
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Additionally, a 0.5% decrease in withholding tax on real estate transactions is under review. The FBR’s revenue target is Rs. 14,305 billion, with Rs. 600 billion expected from better enforcement and Rs. 400 billion from new policy changes. Tax collection on agricultural income is set to begin on July 1, 2025.
The IMF continues to press for a broader tax base and improved economic documentation.
