Hajra Naz
The Federal Board of Revenue (FBR) is drafting a set of proposals for the next fiscal year that could shake things up for online sellers, big corporations, and salaried individuals alike. Among the suggestions on the table is an increase in the withholding tax applied to buying and selling through popular online platforms like Daraz, OLX, Zameen, and PakWheels.
According to sources familiar with the matter, the FBR is preparing to present these plans to the visiting team from the International Monetary Fund (IMF), which is due to begin formal negotiations starting tomorrow. The talks will play a key role in shaping the upcoming FY2025–26 federal budget.
Online platforms are subject to a 0.25% withholding tax, but that rate may be raised to help the government meet the IMF’s demand for expanding the tax net. The proposed adjustment is part of a broader set of financial reforms, which will soon be shared with Prime Minister Shehbaz Sharif. The federal budget is expected to be unveiled on June 2.
Rollback of Super Tax to Woo Investors
Another big change being considered is the gradual rollback of the 10% super tax on large companies. Over the past year, this tax has raised the effective corporate tax rate in industries like banking, cement, oil, and tobacco to nearly 39%, which many investors say is too high. Government officials believe phasing out this levy could help resolve legal tax disputes and unlock more than Rs. 200 billion currently in litigation.
Possible Tax Relief for Salaried Employees
There’s some potential good news for the salaried class. The government is looking into raising the monthly tax-free income threshold from Rs. 50,000 to Rs. 80,000. If this goes through, anyone earning up to Rs. 960,000 a year would be exempt from income tax. At the same time, a 10% surcharge applied to high-income individuals making more than Rs. 10 million per month could also be removed.
Read More: FBR Offers Multiple Job Opportunities in Pakistan
Pension Tax Proposal Sparks Concern
However, not all the proposals are being welcomed. One of the more controversial ideas under discussion is a new 5% income tax on pensioners. If approved, this would directly affect retired government employees, many of whom are already pushing back through unions and advocacy groups.
Relief for Manufacturers and Real Estate, Mixed Bag for Auto Sector
Other sectors could see targeted relief. The manufacturing and real estate industries may benefit from the removal of withholding taxes on imported raw materials and lower transaction taxes on property sales.
On the automotive side, there’s talk of easing import duties on foreign vehicles, which could bring down costs for buyers. However, locally assembled cars, especially those with engine sizes over 1300cc, might be hit with higher taxes.
Big Goals, Tough Road Ahead
Even with all these proposals, officials admit that the government’s ambitious revenue target of Rs. 12.3 trillion won’t be easy to hit without bold structural changes. Much of the focus in the upcoming IMF discussions will likely center on concrete steps to tighten fiscal discipline, improve digital tax compliance, and build a more stable revenue base.
With just weeks left before the budget announcement, all eyes are now on how these proposals take shape—and how they’ll affect businesses, taxpayers, and the broader economy moving forward.
