Complete chapter-by-chapter analysis of Pakistan's Federal Budget — income tax relief for salaried class, super tax reduction, property tax changes, IT sector extension, and more. Now passed by the National Assembly.
Budget 2026-27 focuses on three things: relief for salaried taxpayers who felt unfairly burdened, stimulating Pakistan's struggling real estate market, and protecting the IT export sector. The government offered Rs 360 billion in relief while simultaneously targeting Rs 354 billion in additional enforcement — aiming to widen the tax net rather than increase rates on existing taxpayers.
Four slab rates reduced, surcharge abolished for salaried persons, new brackets up to Rs 7M introduced. Biggest relief in three budget cycles.
POS relief for small retailers, airline parts exemption, FED on mineral water dropped, Tier-1 retailer regime eased for businesses under Rs 200M.
Super tax reduced from 10% to 8% for most large corporates (income over Rs 500M). Exporters get full super tax abolishment — a landmark change.
Capital Value Tax on foreign assets abolished, property advance tax structure revised, measures to stimulate documented real estate transactions.
0.25% FTR on IT exports extended 3 more years (was expiring June 2026). New 5% WHT on social media income. EV duty linked to dollar value.
Side-by-side comparison of every major tax rate change between Finance Act 2025 and Finance Bill 2026-27, with impact direction.
All information on this page is sourced from the Finance Bill 2026-27 as presented in the National Assembly on June 12, 2026, the PwC Pakistan Tax Memorandum (June 13, 2026), reporting by Dawn and Express Tribune, and the official FBR Salient Features document. Rates are confirmed as passed on June 23, 2026.
Finance Minister Aurangzeb described this budget's income tax changes as directly responding to data showing salaried workers paid Rs 605 billion in FY2024-25 — a 55% year-on-year increase — because withholding at source leaves no room for underreporting.
| Annual Income (PKR) | FY 2025-26 Rate | FY 2026-27 Rate | Fixed Tax | Change |
|---|---|---|---|---|
| Up to Rs 600,000 | 0% | 0% | — | No change |
| Rs 600,001 – 1,200,000 | 1% | 1% | — | No change |
| Rs 1,200,001 – 2,200,000 | 11% | 11% | Rs 6,000 | No change |
| Rs 2,200,001 – 3,200,000 | 23% | 20% ↓ | Rs 116,000 | ↓ −3% |
| Rs 3,200,001 – 4,100,000 | 30% | 25% ↓ | Rs 316,000 | ↓ −5% |
| Rs 4,100,001 – 5,600,000 | 35% | 29% ↓ | Rs 541,000 | ↓ −6% (new bracket) |
| Rs 5,600,001 – 7,000,000 | 35% | 30% ↓ | Rs 976,000 | ↓ −5% (new bracket) |
| Over Rs 7,000,000 | 35% | 35% | Rs 1,396,000 | No change |
Source: Finance Bill 2026-27 as presented by FM Aurangzeb June 12, 2026. Confirmed by Geo.tv, ARY News, cssprep.com.pk.
The 9% surcharge on salaried individuals earning above Rs 10 million has been completely abolished in FY 2026-27. FM Aurangzeb described its removal as a "long-standing demand" of the salaried class. Non-salaried individuals and AOPs continue to pay 10% surcharge above Rs 10M.
The sales tax changes in Budget 2026-27 are focused on easing compliance burdens for small retailers while maintaining or increasing documentation requirements for larger businesses.
| Change | Previous | New (FY 2026-27) | Impact |
|---|---|---|---|
| Standard GST Rate | 18% | 18% No change | Unchanged |
| Small retailer fixed tax (turnover ≤ Rs 200M) | Tier-1 POS regime | 1% of sales (fixed) | Relief for small traders |
| Airline parts import (all airlines) | PIA only exempt | All airlines exempt | AirSial, AirBlue benefit |
| FED on mineral water / low-sugar drinks | 20% FED proposed | FED scrapped | Relief for beverages sector |
| Coal VAT for IPPs | Standard rate | 1% VAT (reduced) | Energy cost relief |
| POS opt-out (turnover ≤ Rs 200M) | Mandatory POS | May opt out (irrevocable) | Small trader compliance ease |
The Finance Bill 2026-27 proposes to completely abolish super tax on exporters — described by the Finance Minister as a major signal to Pakistan's export sector. For other large corporates, the rate is reduced from 10% to 8% on income exceeding Rs 500 million.
| Category | FY 2025-26 | FY 2026-27 | Change |
|---|---|---|---|
| Exporters | 10% (if income > Rs 150M) | 0% — Abolished ↓ | ↓ Fully abolished |
| Large corporates (income > Rs 500M) | 10% | 8% ↓ | ↓ −2% |
| Banking sector | 10% | 10% | No change |
| Fertiliser companies | 10% | 10% | No change |
| Oil & Gas exploration | As per Rule 4, Fifth Schedule | Capped per Rule 4 | No change |
The property-related changes in Budget 2026-27 are aimed at reducing transaction costs that had suppressed documented real estate activity. The Capital Value Tax on foreign assets has been abolished to encourage disclosure.
| Item | FY 2025-26 | FY 2026-27 | Impact |
|---|---|---|---|
| Capital Value Tax on foreign assets | Applicable | Abolished | Encourages foreign asset disclosure |
| Advance tax — property buyer (filer) | 3% | Revised (direction: lower) | Lower transaction cost |
| Debit/credit card on international transactions | 5% | 0.5% | ↓ Major relief for banking channels |
| Section 7E (deemed rental income) | Applicable with clarifications | Clarifications retained per SRO 761 | No new change |
The preferential 0.25% Final Tax Regime on IT export earnings was set to expire June 30, 2026. Budget 2026-27 extends it for three more years. IT exports have grown 20% in the current year and are expected to reach $4.5 billion.
| Item | Previous | FY 2026-27 | Impact |
|---|---|---|---|
| IT export FTR (PSEB-registered) | 0.25% — expiring Jun 2026 | 0.25% extended 3 years | Major relief for IT sector |
| Social media income WHT | Not applicable | 5% WHT (new) | New tax on content creators |
| EV excise duty (CBU, value ≤ $75,000) | Fixed rate | Zero FED | EV affordability boost |
| EV excise duty (CBU, value > $75,000) | Fixed rate | Dollar-value linked | Higher-end EVs pay more |
| Mobile phone import tax | Lump sum | Instalment-based (via PTA) | Easier for consumers |
Finance Act 2025 (TY 2025-26) vs Finance Act 2026 (TY 2026-27) — verified from official sources
| Item | FY 2025-26 | FY 2026-27 ✓ | Direction |
|---|---|---|---|
| Salaried nil-tax threshold | Rs 600,000 | Rs 600,000 | — No change |
| Salaried Rs 2.2M–3.2M rate | 23% | 20% | ↓ Relief |
| Salaried Rs 3.2M–4.1M rate | 30% | 25% | ↓ Relief |
| Salaried Rs 4.1M–5.6M rate | 35% | 29% (new bracket) | ↓ Relief |
| Salaried Rs 5.6M–7M rate | 35% | 30% (new bracket) | ↓ Relief |
| Salaried top rate (Rs 7M+) | 35% | 35% | — No change |
| Salaried surcharge (Rs 10M+) | 9% | 0% — Abolished | ↓ Major relief |
| Non-salaried surcharge (Rs 10M+) | 10% | 10% | — No change |
| Corporate tax rate | 29% | 29% | — No change |
| Super tax — exporters | 10% | 0% — Abolished | ↓ Major relief |
| Super tax — large corporates (Rs 500M+) | 10% | 8% | ↓ Relief |
| Standard sales tax rate | 18% | 18% | — No change |
| IT export FTR (PSEB) | 0.25% | 0.25% (extended 3yr) | ↑ Extended |
| Social media income WHT | None | 5% (new) | ↑ New tax |
| Capital Value Tax on foreign assets | Applicable | Abolished | ↓ Relief |
| Debit/credit card international WHT | 5% | 0.5% | ↓ Major relief |
| FED — mineral water / low-sugar drinks | 20% (proposed) | Dropped | ↓ Scrapped |
| Small trader sales tax (≤ Rs 200M) | Tier-1 POS regime | 1% fixed on sales | ↓ Simplified |
Sources: Finance Bill 2026-27 (passed June 23, 2026), PwC Pakistan Tax Memorandum, Dawn, Express Tribune, Sarmaaya.pk, cssprep.com.pk.