KARACHI – Budget 2025-26 is set to be unveiled in Early June, and government of Pakistan is planning to boost revenue by imposing new taxes.
Ahead of the budget, the government is planning to impose Federal Excise Duty on several edible items, including soft drinks, ice cream, and noodles. This move is expected to dent consumers and additional revenue will help address fiscal challenges.
The government is set to propose 5 percent Federal Excise Duty (FED) on more than 50 categories of ultra-processed food products in upcoming fiscal year 2026 budget. This move aims to boost indirect tax revenue by generating approximately Rs. 250 billion, according to sources from the Federal Board of Revenue (FBR).
The list of items likely to be taxed includes popular products like frozen meat, packed chips, sods, instant noodles, biscuits, ice cream, sauces, ready-to-eat meals, and several others. Officials say the measure is part of a broader government strategy to expand the excise duty base and increase revenue collection.
If implemented, this will be the largest indirect tax initiative announced for revenue generation in recent years. The proposal is currently under review and is expected to be presented during the upcoming budget discussions.
Industry representatives and consumer groups are watching the development closely, as the move could affect prices and consumption patterns of widely used food products.
The government hopes that the additional revenue collected through this duty will help strengthen fiscal resources and support ongoing economic initiatives.
Budget 2025
Pakistan and the International Monetary Fund (IMF) are negotiating 2025-26 federal budget to meet agreed fiscal targets. Pakistan’s economy shows improvement with a current account surplus, lower inflation, and increased investor confidence.
However, challenges remain, including a large external financing gap and risks from global and regional tensions. The IMF expects Pakistan to reduce its fiscal deficit, control spending, and maintain a primary surplus to ensure debt sustainability and support moderate economic growth. The budget is expected to be announced on June 2.
Budget 2025-26: What new Restrictions are Coming for Non-Filer Pakistanis?
