Freelancers, YouTubers & Pensioners Targeted in Govt’s Rs. 600 Billion Tax Push

The federal government is planning new tax measures for the 2025–26 budget. These are expected to raise up to Rs. 600 billion. A 3.5% tax on revenue from social media platforms is one of the main proposals. This tax could generate about Rs. 52.5 billion. Platforms affected include

• YouTube
• TikTok
• Others.

Another significant measure under consideration is a tax ranging from 2.5% to 5% on monthly pensions exceeding Rs. 400,000. This move could add Rs. 20–40 billion to the national treasury. This comes at a time when government pension expenditures have already soared to Rs. 673 billion and are expected to reach a staggering Rs. 1 trillion in the near future.

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To standardize consumption taxes, the General Sales Tax (GST) on selected items will be revised by market rates published by the Pakistan Bureau of Statistics (PBS). One clear example is sugar, for which GST is currently calculated at Rs. 72.22 per kilogram, despite the actual market price hovering around Rs. 150. Adjusting this rate could potentially yield Rs. 70–80 billion in additional revenue.

The government also plans to raise taxes on processed food products. As part of a larger plan to raise the Federal Excise Duty (FED) to 50% by 2029, a 20% hike is anticipated on goods including snacks and biscuits. An increase in excise duty on cigarettes is also being considered.

A major structural reform is in the works as well. The government has submitted legislation to abolish the ‘non-filer’ category. Under this proposal, non-filers will be barred from purchasing property and vehicles. This will be implemented under a new provision, Section 114C of the Income Tax Ordinance, with possible threshold adjustments to widen its reach.

Another revenue-generating strategy involves the petroleum sector. The government is reviewing a proposal for a petroleum development levy on furnace oil and may also introduce a Rs. 5 per liter increase in the levy on petrol and diesel, branding it as a carbon tax. Depending on the rate applied, this could raise between Rs. 35 billion and Rs. 80 billion.

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As part of its compliance strategy, the government is thinking of raising advance taxes on distributors and retailers to meet an IMF-mandated goal of collecting Rs. 295 billion from the retail sector by December 2025.

The IMF has also suggested raising federal excise taxes on pesticides and fertilizers by 5%, which may increase tax income by around Rs. 30 billion.