In a dramatic fiscal move, the Finance Bill 2025 has dropped a heavy hammer on the Pakistani public, proposing an enormous burden of over Rs600 billion in new taxes and enforcement measures.
This ambitious and controversial initiative aims to push the Federal Board of Revenue (FBR) toward its eye-watering revenue target of Rs14.13 trillion for the upcoming fiscal year.
For the first time, the Finance Bill introduces sweeping restrictions and enforcement powers, particularly targeting non-filers. From freezing bank accounts to banning the purchase of vehicles and property, non-filers face a new era of financial isolation. The government’s tax net is expanding like never before—and so is the burden on the average citizen.
The total tax and enforcement measures amount to Rs670 billion, but after subtracting relief measures worth Rs58 billion (mainly for the salaried class), the net burden stands at a massive Rs623 billion. The breakdown shows Rs281 billion in new taxes and a staggering Rs389 billion in enforcement-related actions.
Among the headline-grabbing proposals, the Finance Bill 2025-26 introduces a new levy on digital transactions: a 2% tax on the gross value of goods sold through online platforms. This is part of a wider crackdown on e-commerce, where the government is expanding definitions and obligations to ensure the booming sector doesn’t escape the tax radar. Banks, courier companies, and payment gateways are now conscripted as tax collectors, ensuring no rupee slips through the cracks.
Withholding tax rates are also climbing across the board:
• On cash withdrawals by non-filers, from 0.6% to 1%
• On services, from 4% to 6%, with some exemptions for IT services
• On profits from debt, from 15% to 20%
• On dividends, hiked to 25%
Even everyday essentials aren’t spared. Imported pet food, chocolates, cereals, and coffee will now face full retail-level sales tax. Solar panels, previously untaxed to promote clean energy, will now face an 18% sales tax, adding to the financial burden for households and businesses alike.
Relief, where offered, is minimal. A one-year extension in income tax exemptions and sales tax relief for FATA/PATA residents has been proposed. The government also promises a reduced tax rate for those earning under Rs3.2 million and slight relief for salaried individuals with a drop in surcharge rate from 10% to 9%.
However, the cuts in relief pale in comparison to the new burden the Finance Bill places on the economy. Even iconic breakfast items like sheermaal, vermicelli, buns, and rusks are being stripped of tax concessions as part of GST reform. Though the government proposes exemption for staple foods for the people with lower income, the rising costs elsewhere may cancel out such small comforts.
In conclusion, Finance Bill 2025 is more than just a tax document—it’s a fiscal earthquake. While it may boost the FBR’s collection targets, it does so by shifting a colossal burden onto the public. With prices, restrictions, and compliance obligations all surging, the average Pakistani faces a challenging year ahead.