ISLAMABAD – The federal government on Friday set a tax collection of Rs14, 305 trillion during the upcoming federal budget for fiscal year 2025-26.
The sources said that the federal government also proposed tax reduction in several actors including automobiles.
They said that the consultations are underway between the government and the International Monetary Fund (IMF) regarding tax proposals for the next federal budget.
One of the key suggestions under consideration is a reduction in taxes on vehicles and auto parts.
As part of the proposal, the current 2% additional customs duty on auto parts may be eliminated. A gradual reduction in the existing 4% to 7% duty slab is also being considered. Additionally, a 20% cut is proposed in the 15% to 90% duty currently imposed on vehicles.
In order to boost exports by $5 billion, the government is also expected to reduce taxes on industrial raw materials.
A plan to lower duties on industrial inputs and semi-finished goods is under review. Sectors likely to benefit include textiles, chemicals, auto parts, plastics, iron, and the steel industry.
The sources said that the Federal Board of Revenue (FBR) will be assigned a tax collection target of Rs14.305 trillion for the next fiscal year. Of this, Rs600 billion is expected to be generated through the implementation of new laws, while an additional Rs400 billion is anticipated from fresh policy measures.
Meanwhile, the IMF emphasized the need to document the economy as a means of increasing revenue. Sources added that taxation on agricultural income is set to begin from July 1, 2025.
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