Budget-Taxation--2 (Last)-ISLAMABAD

ISLAMABAD, (APP - UrduPoint / Pakistan Point News - 12th Jun, 2026) Finance Minister Muhammad Aurangzeb announced that the government has decided to broaden the tax-base and, following consultations with representatives of retailers and shopkeepers would introduce a fixed tax scheme under Section 99B of the Income Tax Ordinance. The scheme would apply to shopkeepers and retailers with annual incomes of up to Rs 200 million.

He clarified that the objective of these measures is not merely to increase revenue collection but also to curb tax evasion, under-invoicing, and undocumented economic activities, thereby supporting sustainable economic development.

Highlighting institutional reforms, Aurangzeb said the government would establish a National Faceless Centre empowered to conduct audits, assessments, and quality control functions. A dedicated field verification wing would also be responsible for verification, registration, and recovery processes.

He stated that the new system would significantly reduce human interaction in tax collection procedures. All communications would be conducted through the Federal board of Revenue's (FBR) IRIS Portal, ensuring that taxpayers and tax officers have no direct contact. This would enhance transparency and minimize opportunities for corruption.

The finance minister said the system would be supported by a comprehensive data management framework, similar to modern customs operations, which would help eliminate corruption in income tax and sales tax administration.

He further announced the introduction of an Algorithmic Assessment Mechanism and a Central Data Hub to address systemic deficiencies, improve audit procedures, and facilitate taxpayers through automated processes.

The government would also utilize third-party data integration and taxpayer outreach initiatives to automate access to property records, vehicle registration data, banking information, and utility records for the preparation of comprehensive taxpayer profiles.

The minister expressed confidence that these reforms would promote economic documentation, improve tax compliance, and strengthen the country's tax administration framework.

The minister said that the digital economy was the country's fastest-growing export sector.

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Describing IT services, freelancers, software houses, and digital exports as national assets, he announced a three-year extension of the Final Tax Regime (FTR) for the IT sector until June 30, 2029, to help increase exports.

He also announced reduction in the advance income tax on exports from 2 percent to 1.25 percent to promote export-led growth and strengthen the country's external sector.

The minister announced the abolition of Capital Value Tax (CVT) on foreign assets, saying the measure would encourage investment, improve documentation of the economy, and support sustainable economic growth.

Discussing revenue measures, Aurangzeb said data collection and automation within the FBR remain government priorities to ensure proper assessment of the national taxation system and accurate information regarding declared assets.

He announced that the government has decided to expand production monitoring and digital invoicing systems. Real-time production monitoring would be introduced across various industrial sectors, while digital invoicing networks would promote transparency throughout the supply chain.

Regarding Federal Excise Duty (FED), the minister announced that imported SUVs and vehicles with engine capacities between 2,000cc and 3,000cc would be subject to a 62 percent FED, while vehicles with engine capacities exceeding 3,000cc would face a 66 percent duty.

On customs duties, he said the government intended to provide relief to the automobile sector. Tax relief measures for motorcycles, rickshaws, vehicles, and buses would continue in the coming fiscal year. Additionally, one percent reduction in duty would be provided on imported electric trucks.

Announcing relief measures for the health sector, the minister said the government has decided to grant tax exemptions on more than 100 categories of raw materials used in the local manufacturing of medicines for cancer and other diseases.

He also announced reductions in duties for export-oriented industries, the chemical sector, small and medium-sized enterprises (SMEs), and their industrial inputs.