The National Assembly on Tuesday passed the budget for fiscal year 2026-27, accepting revised duties on imported vehicles, sales tax on stationery items, and further restrictions on late tax filers.
Finance Minister Muhammad Aurangzeb moved the bill for the House to approve the budget proposals for the next fiscal year. The approved budget has a total outlay of Rs. 18.77 trillion. It sets a tax collection target of Rs. 15.26 trillion for the Federal Board of Revenue (FBR), with non-tax revenues estimated at Rs. 5.33 trillion and a targeted fiscal deficit of Rs. 5.22 trillion, or 3.6% of gross domestic product. The government has committed to achieving a primary surplus of Rs. 2.82 trillion under its reform program with the International Monetary Fund (IMF).
Under the budget, defense spending was allocated nearly Rs. 3 trillion, pension expenditures are set at Rs. 1.16 trillion, and the federal Public Sector Development Program was approved at Rs. 1 trillion.
The finance bill includes revisions to income tax rates for salaried individuals, changes in the taxation of income earned through social media platforms, and amendments affecting property transactions. The government also approved revised duties on imported and electric vehicles, effective July 1.
According to the Finance Bill, effective July 1, imported vehicles from 2,000-3,000cc would face 86% duty, while imported vehicles of higher engine capacity would be subject to 92% duty.
Taxes on vehicles 1,800-2,000cc have been reduced from 156% to 74%, while the duty rate on vehicles 1,500-1,800cc has been slashed from 91% to 57%. For imported vehicles from 1,000-1,500cc, taxes and duties have been reduced from 76% to 52%, while the duties on 850-1,000cc imported vehicles have declined from 66% to 42%. Vehicles up to 1,800cc would also not face any special excise duty.
For electric vehicle imports, those valued up to $75,000 face 30% duty, while those valued above $110,000 would be subject to 40% customs duty.
Additionally, from July 1, vehicles up to 1,000cc would face a one-time fixed tax of Rs. 10,000 in the federal jurisdiction, while pre-2010 models up to 1,000cc would have to pay Rs. 20,000 in token tax. Vehicles 1,001-1,300cc will see a token tax equal to 0.3% of the total invoice value. A token tax of Rs. 2,500 would apply to pre-2010 model vehicles, while Rs. 6,200 token tax would be paid on post-2010 vehicles.
The National Assembly approved a proposal for concessional sales tax of 10% on stationery items such as pencils, pens and sharpeners.
Lawmakers further approved amendments to Section 182 of the Income Tax Ordinance, 2001, with either the tax imposed on taxable income or the higher tax from the previous three years to apply. Authorities have also tightened restrictions on non-filers, with those failing to comply with FBR notices to face heavy fines. The first violation of an FBR notice would result in a Rs. 1 million fine, while repeated violations may attract a penalty of up to Rs. 2 million.
Traders, factories and industrial units who fail to install the electronic tax monitoring system by July 1 face penalties, including up to five years’ imprisonment. Those who install the system can avail a rebate of up to Rs. 30 million from the Federal Board of Revenue.
Additionally, effective July 1, all income tax returns must be filed electronically through the IRIS portal. This includes companies’ financial statements.
Opposition walkout
The opposition staged a walkout of the National Assembly prior to the finance minister’s presentation of the proposals. This followed a speech by Leader of the Opposition in the National Assembly Mehmood Khan Achakzai, during which he criticized Speaker Ayaz Sadiq and accused the government of violating the Constitution.
During his speech, he criticized the government for the life imprisonment sentence for Baloch Yakjehti Committee leader Dr. Mahrang Baloch, as well as its response to the demonstrations in Pakistan-administered Kashmir.
Alleging the incumbent government had sidelined Khyber-Pakhtunkhwa, he demanded provincial autonomy over use of resources.
In response, the NA speaker accused Achakzai of speaking against “Pakistan, armed forces, and the judiciary,” adding he would never allow this to happen. He also noted that despite the opposition lawmakers declaring Parliament “fake,” they had no such scruples when they addressed the same.
Following the opposition leader’s address, Prime Minister Shehbaz Sharif addressed Parliament, hoping ongoing talks between the U.S. and Iran would lead to a “long-lasting agreement.”
Recalling the dialogue process, underway in Switzerland, congratulated the nation and the members of the House for Pakistan’s “historic” role in mediating peace between Tehran and Washington. He also noted Iranian President Masoud Pezeshkian was to visit Pakistan today, stressing it was not the time to raise differences, but rather to strengthen ties between the neighboring countries.
He also pushed back against Achakzai’s assertions that he did not focus on “smaller” provinces, noting he had always maintained that Pakistan could only progress if all four provinces progressed. He noted the opposition leader had called the incumbent government “illegitimate,” adding that if the government that had been formed after the 2018 elections was legitimate then so was the incumbent government.