The federal government has once again set a challenging tax collection target of Rs15.26 trillion for the Federal Board of Revenue (FBR) amid new revenue generation measures of Rs650 billion for the next fiscal year.
Tax Collection Target for FY2026-27
The tax collection target for the FBR is Rs15.26 trillion for the fiscal year 2026-27 as against the revised target of Rs12.98 trillion of the ongoing year 2025-26, showing an increase of 17.6 percent. The FBR’s official informed that the new generation measures are around Rs650 billion in which the Rs400 billion would be collected through enforcement measures. Meanwhile, Rs150 billion would be collected through new or increased taxes.
New Sales Tax on Retail Items
In new measures, the government has decided to impose sales tax on hundreds of items sold in retail packaging. The items include milk, baby formula milk and other milk-based products. An 18 percent GST will also be collected on ghee, cooking oil, sweets, pasta, sauces, jams and fruit juices. Agricultural medicines and disinfectants sold in retail packaging have also been brought under the sales tax regime.
Meanwhile, tax has been imposed on plastic household items, kitchenware and storage items. Bags, suitcases, handbags and other travel goods will also become more expensive. All types of shoes have been brought under the scope of sales tax, while bathroom fittings, sanitary ware and washroom accessories have also been taxed.
Property Tax and Income Declaration
The government has proposed that buyers purchasing property worth more than Rs100 million must declare their sources of income. The law will come into effect from July 1, 2026. Those who fail to declare their income sources will not be allowed to buy property. The additional tax rate will continue to apply to non-filers involved in buying and selling property.
Tax on Digital Content Creators
In order to discourage misuse of life insurance policies and to reduce arbitrage through sham life insurance policies, a tax has been proposed on such schemes. A withholding tax regime has been introduced on revenues received by digital content creators and social media influencers from platforms such as YouTube, Facebook, Instagram and TikTok. Banking and financial institutions shall deduct tax on such receipts.
Changes in Tax Rates for Distributors
The reduced minimum tax rate for distributors, dealers, sub-dealers and wholesalers of specified sectors has been increased from 0.25 percent to 0.5 percent, subject to prescribed documentation requirements. Under the income tax proposal, banking companies and Electronic Money Institutions shall electronically provide information relating to high-value deposits and withdrawals for algorithmic comparison with tax declarations to identify significant mismatches and broaden the tax base.
Empowering FBR for Real-Time Reporting
The FBR has been empowered to require specified persons to install electronic resources and integrate business systems for real-time reporting of transactions. Failure to comply may result in disallowance of expenditure. Meanwhile, penalties for non-compliance, including failure to furnish statements, integration failures, late inclusion in ATL and incorrect withholding tax claims, have been enhanced to improve deterrence and adjust inflation.
National Faceless Centre and Automated Settlement
In streamlining measures, a National Faceless Centre is being established to conduct faceless audits, assessments and appeals through technology-driven processes, reducing taxpayer interface and enhancing transparency. Meanwhile, a new automated settlement mechanism has been introduced to allow taxpayers to settle identified discrepancies through a technology-based process without separate penalty or default surcharge.
Litigation and Dispute Resolution
The government has proposed that an independent mechanism has been introduced for scrutiny of departmental litigation to improve quality and consistency of tax litigation management. The ADR framework has been revised to improve efficiency and facilitate quicker resolution of tax disputes. Comprehensive provisions have been introduced to define Authorised Shipping Agents and strengthen taxation and compliance relating to nonresident shipping operations.
Financial Statements and Compliance
Companies shall be required to submit financial statements in electronically readable formats to facilitate automated processing and analysis. The commissioner has been empowered to require re-audit, inventory valuation or actuarial valuation by independent experts in appropriate cases. A dedicated Directorate General (Field Compliance) has been created to strengthen compliance functions.
Federal Excise Duty Changes
In Federal Excise Duty, the relief measures included reduction on FED on foreign travel. For business-class travel to the United States, FED is proposed to be reduced from Rs350,000 to Rs50,000. For tickets to the Middle East and Africa, FED is proposed to be cut from Rs105,000 to Rs25,000. For passengers traveling to Europe, FED is proposed to be reduced from Rs210,000 to Rs40,000. For the Far East and Australia, FED is also proposed to be reduced from Rs210,000 to Rs40,000.
Meanwhile, it has proposed reduction in FED on import of acetate tow Rs44,000 to Rs10,000 and removing Federal Excise Duty on WHO standard compliant sports/ electrolytes replenishing beverages. It has also proposed exemption to strategic imports of vehicle for SCO summit and counterterrorism. In revenue generation measures, the government has recommended imposition of FED at Rs16,500 from Rs10,000 per kg e-liquid for electronic cigarettes.
