Finance Bill proposes 15% sales tax exemption to PIAC, cuts stationery tax to 10%

Pakistan’s Finance Bill for fiscal year 2026-27 proposes a series of tax measures affecting vehicle owners, education-related goods and the aviation sector, including a 15-year sales tax exemption for aircraft imported by the national carrier, Pakistan International Airlines (PIA).

The draft amendments, prepared following parliamentary directions for incorporation into the Finance Act 2026-27, also introduce revised vehicle taxation rules and changes to sales tax rates on selected consumer goods.

Under the bill, aircraft imported by PIA would remain exempt from sales tax for 15 years, a move aimed at facilitating fleet modernization and reducing operational costs for the state-owned airline.

The legislation also proposes reducing the sales tax on children's stationery items, including pencils, pens and sharpeners, to 10% from 18%.

The bill introduces new vehicle-related taxes that would take effect on July 1.

Under the proposed measures, vehicles with engine capacities of up to 1,000 cubic centimeters (cc) would be subject to a one-time fixed tax of PKR 10,000.

For vehicles manufactured before 2010 with engine capacities of up to 1,000cc, the annual token tax has been proposed at PKR 20,000.

Vehicles ranging from 1,001cc to 1,300cc would be subject to a token tax equal to 0.3% of the total invoice value, while another category of vehicles would face a token tax equivalent to 0.25% of the invoice value under revised schedules outlined in the bill.

The draft law also revises token taxes for older and newer vehicle models. Vehicles manufactured before 2010 would face a token tax of PKR 2,500, while vehicles manufactured after 2010 would be subject to a token tax of PKR 6,200.

The bill notes that certain post-2010 vehicles were previously subject to a token tax of PKR 1,500, indicating a significant increase under the proposed framework.

In addition to vehicle taxation, parliament approved amendments to Section 182 of the Income Tax Ordinance, 2001. Under the revised provisions, penalties and tax liabilities may be determined based on either the tax payable on taxable income or the highest tax amount assessed during the previous three years, whichever is greater.

The proposed measures remain subject to final parliamentary approval before becoming law.