Finance Bill 2026 sails through National Assembly after days of debate

Government says measures aimed at broadening the tax base, increasing compliance and restructuring key sectors

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Photo: File

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ISLAMABAD:

The National Assembly on Tuesday passed the federal budget worth more than Rs18.7 trillion through a majority vote, completing approval of the Finance Bill 2026-27 amid a lengthy sitting that introduced sweeping tax and regulatory changes.

The approval marks the formal adoption of the new financial framework for the upcoming fiscal year, with the government saying the measures were aimed at broadening the tax base, increasing compliance and restructuring key sectors.

According to the Finance Bill 2026-27, revised income tax slabs have been introduced for salaried individuals, while new levies and exemptions will apply to corporate entities, property transactions and digital income streams, including earnings from social media platforms.

Under the new structure, individuals earning up to Rs600,000 annually will remain exempt, while higher income brackets will be taxed progressively, with rates rising up to 35 per cent for annual incomes above Rs7 million.

The legislation also introduced changes to property taxation, including advance taxes on both buyers and sellers, alongside new withholding tax provisions on digital earnings.

Significant amendments were also approved for corporate taxation, including revised rates for banking, fertiliser and large corporate sectors, depending on income thresholds.

The bill further included changes to import duties on vehicles, with reduced overall tax burdens on certain engine capacities, while higher duties have been imposed on selected imported electric vehicles based on value brackets.

In the agriculture and industrial sectors, income above specified thresholds will now be taxed at revised flat rates, while exemptions have been granted to selected welfare and charitable institutions, including the Pakistan Red Crescent Society and other named organisations.

The House also approved stricter enforcement measures for tax compliance, including heavier fines for non-filers and individuals failing to comply with Federal Board of Revenue (FBR) notices. Penalties of up to Rs 1million for first violations and Rs 2million for repeat offences have been introduced.

The legislation further strengthened digital tax monitoring, making electronic filing of income tax returns mandatory through the FBR’s online system, while also introducing penalties, including imprisonment, for tampering with monitoring systems.

This is a developing story