New Fiscal Year: Tax Target Set at Rs 14.305 Trillion, Proposed Cuts on Vehicle Taxes

Islamabad: For the upcoming fiscal year 2025-26, the federal budget is expected to set a tax revenue target of Rs 14,305 billion, with proposed reductions in taxes on vehicles and several other sectors.
According to sources, consultations with the International Monetary Fund (IMF) are ongoing regarding tax proposals for the new budget. One major proposal under consideration is a reduction in taxes on vehicles and auto parts. The current 2% additional customs duty on parts is expected to be eliminated, while gradual reductions in the 4% to 7% tax slabs are also being considered. Additionally, a 20% cut in the current 15% to 90% duty on vehicles is proposed.
To boost exports by $5 billion, tax cuts on industrial raw materials are anticipated. These reductions may include duties on raw and semi-finished goods in sectors such as textiles, chemicals, auto parts, plastics, iron, and the steel industry.
The Federal Board of Revenue (FBR) is likely to achieve Rs 600 billion through legal enforcement and Rs 400 billion via new tax measures.
Meanwhile, the IMF has emphasized the need to document the economy to enhance revenue generation. As part of the reforms, the government is expected to begin collecting tax on agricultural income starting July 1, 2025.