The Federal Board of Revenue (FBR) has announced major relief measures for taxpayers under the income tax laws introduced through the Finance Bill, 2026.
i. Reduction in tax rates for salaried individuals: Income tax rates for salaried taxpayers have been reduced through the 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.
ii. Abolition of tax on deemed income from immovable property: Section 7E, relating to the taxation of deemed income from capital assets situated in Pakistan, has been omitted.
iii. Rationalisation of Super Tax: Super Tax has been abolished for persons with income of up to Rs. 500 million. The rate has been reduced from 10% to 8% for persons with income exceeding Rs. 500 million. However, these concessions do not apply to the banking, E&P, and fertiliser sectors.
iv. Reduction in advance tax on the sale and purchase of immovable property: Advance tax rates under Sections 236C (4.5% to 5.5%) and 236K (1.5% to 2.5%) have been reduced and converted into lower flat rates of 2.75% and 1.5%, respectively, to encourage documentation and facilitate transactions in the real estate sector.
v. Rationalisation of tax collection from exporters: Tax collection on export proceeds (comprising 1% withholding tax and 1% advance tax) has been reduced from 2% to 1.25% in order to encourage exports.
vi. Extension of the 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.
vii. 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%.
viii. Adjustability of tax on e-commerce transactions: Tax deducted on e-commerce transactions shall be adjustable for sellers with turnover exceeding Rs. 200 million.
ix. 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 computerised systems has been introduced to facilitate documentation and digital compliance.
x. Withdrawal of advance tax on foreign television plays and advertisements: Advance tax on payments for foreign television plays and advertisements has been withdrawn.
xi. Exemptions for welfare and charitable entities: Income tax exemption has been extended to specified charitable and welfare organisations, including the Pakistan Red Crescent Society, Shaheen Foundation, Bahria Foundation, SIUT, and Dawat-e-Hadiya. These entities already hold approval under Section 2(36) of the Ordinance and exemptions available under Clause 66 of Part I of the First Schedule. This measure eliminates the requirement for these organisations to obtain exemption approval from the Commissioner each year.
xii. Exemption for Special Purpose Vehicles under asset-backed securitisation: The income of qualifying Special Purpose Vehicles established for asset-backed securitisation has been exempted to facilitate capital market development.
xiii. Facilitation for resident Pakistanis regarding ownership of foreign movable and immovable assets: Capital Value Tax is currently charged on foreign movable and immovable assets owned by resident Pakistanis. It is proposed that this tax be abolished.
xiv. Enhanced turnover threshold for withholding tax exemption for small traders: The turnover threshold for exemption from withholding tax for small traders has been increased from Rs. 100 million to Rs. 200 million.
xv. Automatic issuance of exemption certificates for the entire year: Funds and eligible non-profit organisations meeting the prescribed conditions shall be entitled to the issuance of exemption certificates for the entire financial year.
xvi. Determination of the cost of inherited immovable property and family settlements: The law has been clarified regarding the determination of the cost basis of inherited immovable property and the tax treatment of family settlements following death.
