Federal Govt Plans Rs. 600 Billion in New Taxes for FY26
The federal government is preparing to introduce new tax measures worth up to Rs. 600 billion in the 2025–26 budget to meet revenue targets and align with IMF recommendations.
According to Topline Securities, a 3.5% tax is proposed on income earned through social media platforms like YouTube and TikTok, expected to generate around Rs. 52.5 billion. A tax between 2.5% to 5% on pensions exceeding Rs. 400,000 per month is also being considered, with projected revenue of Rs. 20–40 billion. Pension spending has already reached Rs. 673 billion and may climb to Rs. 1 trillion.
Additionally, the government plans to align the General Sales Tax (GST) on selected items with actual market prices. For instance, sugar is currently taxed at Rs. 72.22 per kg while the market price is Rs. 150, and correcting this disparity could generate Rs. 70–80 billion.
The excise duty on processed foods, such as snacks and biscuits, is expected to rise by 20%, with a roadmap to reach 50% by 2029. Tobacco products may also see a further hike in excise duty.
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A major policy shift is proposed to abolish the non-filer category entirely. If enacted, non-filers would be prohibited from purchasing property and vehicles. The change would come through the proposed Section 114C of the Income Tax Ordinance.
Furthermore, the government may impose a carbon tax in the form of a Rs. 5 per liter increase in the petroleum development levy on petrol and diesel, as well as potentially applying it to furnace oil—expected to raise Rs. 35–80 billion.
To meet the IMF-mandated target of Rs. 295 billion in retail sector taxes by December 2025, advance tax collection from distributors may be increased.
The IMF has also suggested a 5% increase in federal excise duty on fertilizers and pesticides, projected to bring in over Rs. 30 billion in additional revenue.
These measures are part of the government’s broader fiscal strategy aimed at boosting revenues without drastically impacting lower-income households.
