Pakistan likely to reduce Super Tax in budget for FY26

Pakistan is likely to propose a cut in the Super Tax in the upcoming budget for fiscal year 2025-26. Meanwhile, it is likely to keep the corporate tax unchanged and increase the sales tax on smaller vehicles.

Sources at the Ministry of Finance told Nukta preparations are underway for reducing the Super Tax. The Super Tax is an additional tax levied on high-income companies, primarily aimed at collecting extra revenue from profitable sectors to support fiscal consolidation.

According to the sources, amendments are being planned in Section 4C of the Income Tax Act 2001, which pertains to Super Tax. The companies earning an annual profit of PKR 150 million will continue to be exempt from Super Tax. However, adjustments are being considered for companies with higher earnings:

• For companies earning PKR 150–200 million annually, the Super Tax may be reduced from 1% to 0.5%.
• For companies earning PKR 200–250 million annually, the Super Tax may be reduced from 2% to 1.5%.
• For companies earning PKR 250–300 million annually, the Super Tax may remain at 3%.
• For companies earning more than PKR 300 million annually, the Super Tax may remain at 4%.

Other budget proposals

• Sales tax on 850cc vehicles may increase by 5.5% to 18%.
• Tax and duties may be reduced on over 3,500 imported items and raw materials.
• Duties on locally manufactured vehicles, motorcycles, and tractors may be lowered.
• Regulatory duties on imported goods may decrease by 2% to 5%.
• Amendments may be made in the 10th Schedule of Income Tax Act 2001 for imported raw materials.
• Withholding tax on construction industry materials may be cut.
• Withholding tax on property transactions may be removed.
• Federal excise duty on property purchases may be eliminated.
• Capital Gains Tax (CGT) may be increased by 20-25%.

The budget is expected to bring significant tax adjustments, focusing on easing burdens for industries while potentially increasing taxes on real estate transactions.