Govt Eyes Rs500-600bn in New Taxes in Budget 2025-26; Freelancers, Vloggers, Pensioners Likely to Face Tax Net
ISLAMABAD – May 23, 2025:
The federal government is planning to introduce new taxation measures in the upcoming Budget 2025-26, targeting a wide range of sectors including freelancers, vloggers, and pensioners, in a bid to generate an additional Rs500-600 billion in revenue, according to a report released on Thursday by Topline Research.
The report titled ‘Pakistan Federal Budget FY26 Preview’ projects the government will assign the Federal Board of Revenue (FBR) a tax collection target of Rs14.1 to Rs14.3 trillion for the upcoming fiscal year. This marks a 16–18% increase compared to the current year’s tax revenue.
Out of the targeted growth, 12% is expected to come from autonomous growth driven by GDP growth (3.6%) and inflation (7.7%). The remaining 4–5%—equivalent to Rs500–600 billion—is expected to be raised through additional tax measures.
Freelancers and Social Media Incomes to Be Taxed
The report indicates that income from platforms like YouTube, TikTok, and other digital channels may soon be taxed. The Institute of Cost and Management Accountants of Pakistan (ICMAP) has proposed a 3.5% tax rate on such income streams, potentially generating Rs52.5 billion annually.
Tax on Pensioners Under Consideration
Additionally, the government is contemplating a new tax on pensions exceeding Rs400,000 per month. The proposed tax rate ranges between 2.5% and 5%. If implemented, this move could fetch Rs20–40 billion. Last year, the government faced resistance on this proposal, but sources suggest it’s likely to be enforced this year.
Pakistan has already spent Rs673 billion on pension payments during the first nine months of FY24-25, and the annual cost is projected to hit Rs1 trillion.
GST Base Adjustment for Essential Goods
The Pakistan Bureau of Statistics (PBS) has revised how general sales tax (GST) is calculated on key commodities like sugar. Instead of market prices, GST is now based on published rates (Rs72.22/kg for sugar), even though market prices have surged to Rs150/kg. This technical adjustment is expected to contribute Rs70–80 billion in additional revenue.
Health and FED Taxes on the Rise
The government is also reportedly planning to impose a “health tax” on ultra-processed food items such as snacks and biscuits. As part of this initiative, Federal Excise Duty (FED) on such items may rise by 20% in FY26, with a goal to increase FED on these items to 50% by FY29. A simultaneous hike in FED on cigarettes is also anticipated.
Non-Filers to Face Transaction Restrictions
As part of its agreement with the International Monetary Fund (IMF), the government has submitted a bill to parliament aimed at removing the non-filer category. If passed, Section 114C will prevent non-filers from conducting key economic transactions like purchasing vehicles or real estate. The proposal is under Senate committee review, and FBR may require technological upgrades before implementation.
Petroleum Development Levy (PDL) Expansion
To meet revenue goals, the government also plans to increase the Petroleum Development Levy (PDL) on petrol and diesel by Rs5/litre in the form of a “carbon tax” over the next two years. In addition, PDL may be imposed on furnace oil sales for the first time, potentially generating Rs35–80 billion annually.
Retail Sector in IMF’s Crosshairs
IMF has mandated a revenue target of Rs295 billion from the retail sector during the first half of FY26. This target is expected to be met through advance tax hikes on distributors and other retail-related measures.
Other Expected Measures
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A 5% increase in FED on fertilisers and pesticides, potentially raising over Rs30 billion
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Elimination of GST exemptions for FATA/PATA regions
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Full withdrawal of concessionary GST rates on remaining products
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Provincial-level introduction of agriculture income tax
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Higher GST on luxury goods including cosmetics, jewellery, high-end mobile phones, and aircraft
Possible Reliefs
Despite the aggressive tax measures, the government is considering some reliefs, including:
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Income tax relief for salaried individuals
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Incentives for the real estate sector
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Duty reductions or relaxation in the age limit for imported vehicles (from 3 to 5 years)
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Subsidies for housing finance
The Federal Budget for FY2025-26 is scheduled to be presented on June 2, 2025.
