President Asif Ali Zardari has signed the Finance Act 2026 into law, paving the way for tax, tariff, and enforcement measures worth Rs1.02 trillion to take effect from July 1.
The legislation was approved by the president on the advice of Prime Minister Shehbaz Sharif after the National Assembly Secretariat forwarded the bill for presidential assent.
The Finance Act is aimed at helping the government achieve its Rs15.264 trillion revenue target for fiscal year 2026-27 through a combination of new taxation measures, enforcement initiatives, and tariff reforms.
The new law also includes import-stage duty reductions worth Rs143.4 billion, including cuts in Customs Duty, Additional Customs Duty, and Regulatory Duty, along with revisions to exemptions under the Fifth Schedule.
Among the largest revenue-generating measures, the Taxpayer Services and Facilitation Enhancement Programme is expected to contribute Rs144 billion, while the expansion of the Third Schedule of the Sales Tax Act is projected to generate Rs91 billion.
The government estimates that the Faceless Auto Tax Office and algorithmic settlement system will raise Rs85 billion, while another Rs85 billion is expected through the Production Data Integration and Real-Time Sectoral Verification Framework.
Other major initiatives include the Retailer Formalisation and POS Integration Scheme, projected to contribute Rs82 billion, and the Supply Chain Digitalisation Policy, expected to generate Rs75 billion.
The Finance Act also includes measures expected to raise Rs45 billion through ADR-led revenue realization initiatives, Rs43 billion from the Conditionality Framework for High-Value Economic Participation, and Rs40 billion through higher sales taxes aimed at preventing the misuse of industrial imports.
Additional taxation measures include a windfall tax on refineries, expected to generate Rs36 billion, and an increase in the minimum turnover tax for certain distributors from 0.25 percent to 0.5 percent, projected to add Rs35 billion in revenue.
Other measures include risk-based customs valuation, the expiry of reduced sales tax on hybrid vehicles, a federal excise duty on petroleum products used for adulteration, withholding tax on purchases from unregistered entities, and revised tax measures targeting luxury goods, high-end electric vehicles, the steel sector, and trading houses.
The Finance Act 2026 will come into force on July 1, introducing the government’s fiscal measures for the new financial year.
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