ISLAMABAD: The government has taken enforcement and tax policy measures of nearly Rs 650 billion including rationalization of penalty regime, Federal Excise Duty (FED) on luxury vehicles and Naphtha, solvent oil and Rs70 billion worth measure to charge sales tax on the basis of printed retail price basis on 21 items to meet the target of Rs 15,264 billion for 2026-27. However, the government has provided relief to the salaried class and the corporate sector by abolishing and rationalizing super tax, exporters, real estate and reducing Regulatory Duty as well as Additional Customs Duty on hundreds of import tariff lines, top FBR officials said. During the Technical Press Briefing on taxation measures held at the Federal Board of Revenue (FBR), Dr. Hamid Ateeq Sarwar FBR Member (Strategic Transformation) along with Zubair Bilal Member (Inland Revenue - Operations) and Ashaad Jawwad Member (Customs-Policy) explained salient features of the Finance Bill 2026. READ MORE: Taxes & enforcement: Finance Bill may introduce Rs1trn measures Dr. Hamid Ateeq Sarwar explained that only enforcement measures of Rs 600 billion to Rs 650 billion have been taken for the next fiscal year. “The government has announced a pro-growth budget. The FBR is now digitally capable to effectively take enforcement measures”, he said. He said that the no new tax has been imposed, but distortions have been removed in the tax laws. The DG Tax Policy Office Najeeb Memoon and senior officials of FBR including Dr Hamid Ateeq Sarwar gave a technical briefing to the reporters after the announcement of the budget for 2026-27 here at FBR’s headquarters on Friday. The enforcement and administrative measures will fetch additional Rs 400 billion while taxation measures will bring additional revenue of Rs 250 billion in the next fiscal year. With tax collection of Rs 13000 billion till June 30, 2026, the FBR will go close to Rs 14600 billion with the help of nominal growth (real GDP growth of 4 percent plus inflation of 8.2 percent) in the next budget while remaining Rs 650 billion will be materialized with the combination of taxation, enforcement and administrative measures, FBR Members projected. He said that the FBR will introduce Tax Operating Model and National Faceless Centre under reforms. FBR Member clarified that the law, ie, section 114C (Restriction on economic transactions by certain persons) of the Income Tax Ordinance 2001 would be enforced from July 1, 2026 in the real estate sector. Dr. Hamid Ateeq Sarwar insisted that the estimates of taxation or relief measures are only estimates based on a current economic environment For example, we estimated Rs 200 billion revenue loss on account of tariff rationalization, but the actual figure was lower in 2025-26. For the expanding list of Third Schedule for bringing 36 items, the government will fetch additional Rs 70 billion. The Imposition of FED on Naphtha, solvent oil and turpentine will bring Rs 30 billion, enhanced tax rate on luxury EVs will bring Rs 25 billion. The FBR ended arbitrage between industrial and commercial importers as the rate of industrial import stood 1-2 percent Income Tax and 18 percent GST, while the commercial importer rate hovered at 3 and 6.5 percent plus 18 percent GST plus 3 Additional Sales Tax. It will curb the misuse of lower income and sales tax by industrial units on selling their material, and this will bring additional Rs 30 billion into the kitty. The FBR expanded the list of Third Schedule of GST and brought 21 items whereby branded and packaged items of Fast Moving Consumer Goods (FMCG) will charge tax at the retail prices including electronics and several other items. On the revenue measures side, the FBR imposed 5 percent Withholding Tax on social media platforms, imposition of FED at Rs. 16500 from Rs. 10000 per kg e-liquid for electronic cigarettes, FED on Naphtha, solvent oil and turpentine etc, imposition of FED on luxury EVs and other Luxury Vehicles and FED on base oil, base lubricating oil in addition to lubricating oil. The turnover threshold for exemption from withholding tax for small traders has been increased from Rs. 100 million to Rs. 200 million. Funds and eligible non-profit organizations meeting prescribed conditions shall be entitled to issuance of exemption certificates for the whole financial year. The law has been clarified regarding determination of cost basis of inherited immovable property and tax treatment of family settlements after death. On revenue measures on Income Tax side, a tax has been imposed on life insurance schemes. A withholding tax regime has been introduced on revenues received by digital content creators and social media influencers from platforms such as YouTube, Facebook, Instagram and TikTok. Banking and financial institutions shall deduct tax on such receipts. The withholding tax structure on services has been revised. The rate for specified services such as courier, logistics, hotel, transport air cargo, car rental, HR outsourcing, oil drilling has been enhanced from 6 to 7 percent while independent professionals have been separately categorized and rates for certain other services have been rationalized. The reduced minimum tax rate for distributors, dealers, sub-dealers and wholesalers of specified sectors has been increased from 0.25% to 0.5%, subject to prescribed documentation requirements. Banking companies and Electronic Money Institutions shall electronically provide information relating to high-value deposits and withdrawals for algorithmic comparison with tax declarations to identify significant mismatches and broaden the tax base The Board has been empowered to require specified persons to install electronic resources and integrate business systems for real-time reporting of transactions. Failure to comply may result in disallowance of expenditure. The government abolished CVT on foreign assets from 1 percent to zero, abolish pink tax and contraceptives from 18 percent to zero, exemption of sales tax to shipping industry and exempting sales tax on import for upgrading of Brownfield refineries from 18 to zero tax. Copyright Business Recorder, 2026
Rs650bn in enforcement & tax policy steps introduced
ISLAMABAD: The government has taken enforcement and tax policy measures of nearly Rs 650 billion including rationalization of penalty regime, Federal Excise Duty (FED) on luxury vehicles and Naphtha, solvent oil and Rs70 billion worth measure to charge sales tax on the basis of printed retail price basis on 21 items to meet the target of Rs 15,264 billion for 2026-27. However, the government has provided relief to the salaried class and the corporate sector by abolishing and rationalizing super tax, exporters, real estate and reducing Regulatory Duty as well as Additional Customs Duty on hundreds of import tariff lines, top FBR officials said. During the Technical Press Briefing on taxation measures held at the Federal Board of Revenue (FBR), Dr. Hamid Ateeq Sarwar FBR Member (Strategic Transformation) along with Zubair Bilal Member (Inland Revenue - Operations) and Ashaad Jawwad Member (Customs-Policy) explained salient features of the Finance Bill 2026. READ MORE: Taxes & enforcement: Finance Bill may introduce Rs1trn measures Dr. Hamid Ateeq Sarwar explained that only enforcement measures of Rs 600 billion to Rs 650 billion have been taken for the next fiscal year. “The government has announced a pro-growth budget. The FBR is now digitally capable to effectively take enforcement measures”, he said. He said that the no new tax has been imposed, but distortions have been removed in the tax laws. The DG Tax Policy Office Najeeb Memoon and senior officials of FBR including Dr Hamid Ateeq Sarwar gave a technical briefing to the reporters after the announcement of the budget for 2026-27 here at FBR’s headquarters on Friday. The enforcement and administrative measures will fetch additional Rs 400 billion while taxation measures will bring additional revenue of Rs 250 billion in the next fiscal year. With tax collection of Rs 13000 billion till June 30, 2026, the FBR will go close to Rs 14600 billion with the help of nominal growth (real GDP growth of 4 percent plus inflation of 8.2 percent) in the next budget while remaining Rs 650 billion will be materialized with the combination of taxation, enforcement and administrative measures, FBR Members projected. He said that the FBR will introduce Tax Operating Model and National Faceless Centre under reforms. FBR Member clarified that the law, ie, section 114C (Restriction on economic transactions by certain persons) of the Income Tax Ordinance 2001 would be enforced from July 1, 2026 in the real estate sector. Dr. Hamid Ateeq Sarwar insisted that the estimates of taxation or relief measures are only estimates based on a current economic environment For example, we estimated Rs 200 billion revenue loss on account of tariff rationalization, but the actual figure was lower in 2025-26. For the expanding list of Third Schedule for bringing 36 items, the government will fetch additional Rs 70 billion. The Imposition of FED on Naphtha, solvent oil and turpentine will bring Rs 30 billion, enhanced tax rate on luxury EVs will bring Rs 25 billion. The FBR ended arbitrage between industrial and commercial importers as the rate of industrial import stood 1-2 percent Income Tax and 18 percent GST, while the commercial importer rate hovered at 3 and 6.5 percent plus 18 percent GST plus 3 Additional Sales Tax. It will curb the misuse of lower income and sales tax by industrial units on selling their material, and this will bring additional Rs 30 billion into the kitty. The FBR expanded the list of Third Schedule of GST and brought 21 items whereby branded and packaged items of Fast Moving Consumer Goods (FMCG) will charge tax at the retail prices including electronics and several other items. On the revenue measures side, the FBR imposed 5 percent Withholding Tax on social media platforms, imposition of FED at Rs. 16500 from Rs. 10000 per kg e-liquid for electronic cigarettes, FED on Naphtha, solvent oil and turpentine etc, imposition of FED on luxury EVs and other Luxury Vehicles and FED on base oil, base lubricating oil in addition to lubricating oil. The turnover threshold for exemption from withholding tax for small traders has been increased from Rs. 100 million to Rs. 200 million. Funds and eligible non-profit organizations meeting prescribed conditions shall be entitled to issuance of exemption certificates for the whole financial year. The law has been clarified regarding determination of cost basis of inherited immovable property and tax treatment of family settlements after death. On revenue measures on Income Tax side, a tax has been imposed on life insurance schemes. A withholding tax regime has been introduced on revenues received by digital content creators and social media influencers from platforms such as YouTube, Facebook, Instagram and TikTok. Banking and financial institutions shall deduct tax on such receipts. The withholding tax structure on services has been revised. The rate for specified services such as courier, logistics, hotel, transport air cargo, car rental, HR outsourcing, oil drilling has been enhanced from 6 to 7 percent while independent professionals have been separately categorized and rates for certain other services have been rationalized. The reduced minimum tax rate for distributors, dealers, sub-dealers and wholesalers of specified sectors has been increased from 0.25% to 0.5%, subject to prescribed documentation requirements. Banking companies and Electronic Money Institutions shall electronically provide information relating to high-value deposits and withdrawals for algorithmic comparison with tax declarations to identify significant mismatches and broaden the tax base The Board has been empowered to require specified persons to install electronic resources and integrate business systems for real-time reporting of transactions. Failure to comply may result in disallowance of expenditure. The government abolished CVT on foreign assets from 1 percent to zero, abolish pink tax and contraceptives from 18 percent to zero, exemption of sales tax to shipping industry and exempting sales tax on import for upgrading of Brownfield refineries from 18 to zero tax. Copyright Business Recorder, 2026
