ISLAMABAD: Pakistan’s federal government on Tuesday unveiled significant fiscal measures in the Budget for 2025–26, including a proposed increase in sales tax to 18 percent on small vehicles up to 850cc—bringing them in line with the standard rate applied to other categories.
As per the budget details, a standard sales tax rate of 18 percent will be applied to small vehicles up to 850cc, including those that were previously taxed at a lower rate.
This step is intended to bring uniformity to the sales tax structure across petrol, diesel, and hybrid vehicles.
In a major crackdown on unregistered businesses, the government has introduced stringent penalties to ensure compliance. The key measures include:
- Freezing the bank accounts of unregistered businesses
- Banning the transfer of property
- Sealing business premises and confiscating goods in cases of serious violations
However, affected parties will retain the right to appeal within 30 days, giving businesses an opportunity to regularise their status.
Important initiatives
The government has also proposed several important initiatives in the upcoming fiscal year to broaden the tax base and generate additional revenue.
One of the major proposals outlined in the budget document is a 5 percent increase in the tax rate on interest income, raising it from 15 percent to 20 percent.
This increase will apply specifically to passively earned income, with national savings schemes remaining exempt from the hike.
In an effort to harness the growing digital economy, the government has proposed the introduction of taxes on online businesses.
E-commerce platforms will be required to levy taxes on digitally ordered goods and services, while businesses operating on these platforms will need to submit monthly transaction data and tax returns.
