Pakistan contemplating new taxes aiming for PKR 500-600 bn revenue boost

The Pakistani government is set to announce the Federal Budget for fiscal year 2026 on June 2, with plans to introduce several taxation measures aimed at generating an additional Rs500-600 billion in revenue, according to report issued by Topline Securities.

Among the proposed measures is a 2.5% to 5% tax on monthly pensions exceeding PKR 400,000, which could contribute PKR 20-40 billion to the national exchequer. Last year, the government considered but did not implement a similar tax.

“We believe the government will impose this tax in the FY26 budget,” said an analyst at Topline Securities in a research note.

Pakistan’s pension costs reached PKR 673 billion in the first nine months of FY25, with annual expenditures projected at PKR 0.9-1 trillion.

GST Adjustments for Cement, Sugar

The Pakistan Bureau of Statistics has revised the price benchmarks for calculating sales tax on certain commodities, including cement and sugar. Previously, GST on sugar was levied at PKR 72.22 per kilogram, despite market prices exceeding PKR 150/kg.

This change is expected to generate an additional PKR 70-80 billion annually and will likely be formalized in the FY26 Finance Bill.

Health Tax on Ultra-Processed Foods

To promote public health and combat obesity, diabetes and cardiovascular diseases, the government is considering a 20% increase in the federal excise duty (FED) on ultra-processed foods like biscuits and snacks. The long-term goal is to raise the FED to 50% by FY29. A similar hike in cigarette taxes is also expected.

Elimination of Non-Filer Category

Authorities have informed the International Monetary Fund (IMF) that a bill has been submitted to Parliament to restrict non-filers from major economic transactions, including vehicle and real estate purchases.

The Senate committee has reviewed the proposal, but technological upgrades in the Federal Board of Revenue’s system are required for implementation.

Analysts expect Section 114C to be introduced in the budget, though potential adjustments in threshold levels or phased implementation remain possible.