RELIEF MEASURES
Reduction in tax rates for salaried individuals: Income tax rates for salaried taxpayers have been reduced through restructuring of tax slabs. Additional intermediate slabs have been introduced and the threshold for the maximum tax rate of 35% has been increased from Rs. 4.1 million to Rs. 7 million.
Abolition of tax on deemed income from immovable property: Section 7E, relating to taxation of deemed income from capital assets situated in Pakistan, has been omitted. ..Rationalization of Super Tax: Super Tax has been abolished for persons having income of up to Rs. 500 million. The rate has been reduced from 10% to 8% for persons having income of more than Rs. 500 million. However, these concessions do not apply to banking, ENP and fertilizer sectors.
Reduction in advance tax on sale and purchase of immovable property: Advance tax rates under sections 236C (4.5 to 5.5 percent) and 236K (1.5 to 2.5 percent) have been reduced and converted into lower flat rates of 2.75% and 1.5% to encourage documentation and facilitate transactions in the real estate sector.
Rationalization of tax collection from exporters: Tax collection on export proceeds (1% withholding tax and 1% advance tax) has been reduced from 2 % to 1.25% in order to encourage exports.
Extension of concessionary tax rate for IT and IT-enabled services exports: The reduced tax rate of 0.25% for exporters of IT and IT-enabled services has been extended from 2026 up to Tax Year 2029.
Reduction in tax on foreign payments through cards: Advance tax on foreign remittances made through debit, credit and prepaid cards has been reduced from 5% to 0.5%.
Adjustability of tax on e-commerce transactions: Tax deducted on ecommerce transactions shall be adjustable for sellers having turnover exceeding Rs.200 million.
Tax credit for integration with FBR systems: A tax credit equal to 10% of the investment made in electronic resources for integration with FBR’s computerized systems has been introduced to facilitate documentation and digital compliance.
.Withdrawal of advance tax on foreign TV plays and advertisements: Advance tax on payments for foreign television plays and advertisements has been withdrawn.
Exemptions for welfare and charitable entities: Income tax exemption has been extended to specified charitable and welfare organizations including Pakistan Red Crescent Society, Shaheen Foundation, Bahria Foundation, SIUT and Dawat-e-Hadiya. These entities already had approval u/s 2(36) of the Ordinance and two exemption as available in Clause 66 of Part I of the First Schedule. This exemption facilitates the entities as they are not required to obtain exemption from the Commissioner every year.
Exemption for Special Purpose Vehicles under asset-backed securitization: Income of qualifying Special Purpose Vehicles established for asset-backed securitization has been exempted to facilitate capital market development.
Facilitation for Resident Pakistanis on ownership of foreign moveable and immovable assets: Currently Capital Value Tax is being charged on foreign movable and immovable assets of resident Pakistanis. The same is proposed to be abolished.
Enhanced turnover threshold for withholding exemption of small traders: The turnover threshold for exemption from withholding tax for small traders has been increased from Rs. 100 million to Rs. 200 million.
Automatic issuance of exemption certificates for whole year: Funds and eligible non-profit organizations meeting prescribed conditions shall be entitled to issuance of exemption certificates for the whole financial year.
Determination of cost of inherited immovable property and family settlements: The law has been clarified regarding determination of cost basis of inherited immovable property and tax treatment of family settlements after death.
REVENUE MEASURES
Tax on sham life insurance policies: 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.
Withholding tax on income from social media platforms: 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.
Rationalisation of withholding tax rates on services: The withholding tax structure on services has been revised. The rate for specified services has been enhanced, independent professionals have been separately categorized and rates for certain other services have been rationalized.
Revision of minimum tax rate for distributors and wholesalers: The reduced minimum tax rate for distributors, dealers, sub-dealers and wholesalers of specified sectors has been increased from 0.25% to 0.5%, subject to prescribed documentation requirements.
Algorithmic cross-matching of banking and tax information: 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.
Strengthening of electronic integration of businesses: The Board 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.
Rationalisation of penalty regime: 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.
Application of Tenth Schedule to capital gains on listed securities: The exclusion available from enhanced tax rates applicable to non-ATL persons on capital gains from listed securities has been withdrawn to encourage tax compliance and return filing.
STREAMLINING MEASURES
Establishment of National Faceless Centre: A National Faceless Centre is being established to conduct faceless audits, assessments and appeals through technology-driven processes, reducing taxpayer interface and enhancing transparency.
Introduction of Algorithmic Settlement Mechanism: 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. news desk