Pakistan is ready to introduce large tax reductions on vehicles and car parts in the upcoming 2025-26 federal budget, potentially lowering vehicle prices for consumers after years of steep inflation, according to government resources.
The proposals include
• A 20% reduction in customs duties (presently 15-90%) on imported automobiles
• complete removal of the 2% additional customs duty on vehicle components
• Phased decreases in 4-7% duty slabs for industrial raw materials covering textiles, chemicals, and steel
The finances, scheduled for presentation around June 2, are being finalized during ongoing negotiations with the International Monetary Fund (IMF) below Pakistan’s current loan software. Officials are operating on a Rs 14.3 trillion tax target, with Rs 600 billion expected from advanced tax compliance and Rs 400 billion from new sales measures.
Read more: Will car prices go down in Pakistan after IMF deal?
To stimulate exports by as much as $5 billion, discussions are underway regarding tax reductions on essential raw materials utilized across various sectors, including textiles, chemicals, plastics, automotive components, iron, and metals. A reduction in responsibilities on semi-finished goods and industrial raw materials is being deliberate to support industrial increase.
Sources delivered that the real estate area is potentially the subject of a 0.5 percent discount on the withholding tax on the purchase and sale of property.
The proposed tax sales target for the Federal Board of Revenue (FBR) for the next fiscal year is Rs. 14,305 billion. Of this, Rs. 600 billion is projected to return from improved enforcement of existing tax laws, while Rs. 400 billion is predicted from new policy measures.
The government is also planning to begin tax collection on agricultural income starting July 1, 2025.
Meanwhile, the IMF continues to urge Pakistan to expand its tax base and document more of its economy.