President signs Finance Bill 2026, Rs1.02trn tax measures to take effect from July 1

President Asif Ali Zardari has approved the Finance Bill 2026, enforcing new taxation, policy and enforcement measures worth Rs1.02 trillion from July 1, 2026.

The Finance Act 2026 is aimed at helping the government meet its tax collection target of Rs15,264 billion for FY2026-27, with reliance on indirect taxes and withholding tax measures.

The National Assembly Secretariat had sent the bill to the President a day earlier. The President approved it on the advice of the Prime Minister, and the signed copy has been received by the National Assembly Secretariat.

The Act also includes import-stage tax relief with revenue implications of Rs143.4 billion. This includes reductions in Customs Duty, Additional Customs Duty and Regulatory Duty, along with changes to exemptions under the Fifth Schedule from July 1, 2026.

The tariff changes cover thousands of tariff lines and include the removal of redundant exemption entries.

Among major revenue measures, the Taxpayer Services and Facilitation Enhancement Programme is expected to have a revenue impact of Rs144 billion.

Expansion of the Third Schedule of the Sales Tax Act is projected to raise Rs91 billion, while the Faceless Auto Tax Office and algorithmic settlement measures are expected to generate Rs85 billion.

The Production Data Integration and Real-Time Sectoral Verification Framework is also estimated to collect Rs85 billion.

The Retailer Formalisation and POS Integration Scheme is expected to raise Rs82 billion, while the Supply Chain Digitalisation Policy is projected to generate Rs75 billion.

The structured ADR-led revenue realisation measure, ADRC Throughput Optimisation, is estimated to raise Rs45 billion, while the Conditionality Framework for High-Value Economic Participation is projected to generate Rs43 billion.

Sales tax on industrial importers, including an additional 3 per cent on misuse of industrial imports and tax arbitrage, is expected to collect Rs40 billion.

A windfall tax on refineries is projected to raise Rs36 billion, while increasing the minimum turnover tax for certain distributors from 0.25 per cent to 0.5 per cent is expected to generate Rs35 billion.

The Risk-Based Customs Valuation and Intelligence-Led Border Compliance Framework is estimated to raise Rs33 billion.

The expiry of reduced sales tax on hybrid vehicles on June 30, 2026, would have a revenue impact of Rs 31 billion.

Federal excise duty on POL products used for adulteration but not chargeable to petroleum development levy at Rs80 per litre, including white spirit and solvents, is expected to raise Rs29 billion.

Withholding tax on purchases from unregistered entities by individuals and associations of persons is expected to generate Rs28 billion.

Recalibration of withholding taxes on different categories of services is projected to raise Rs27 billion, while the Graduated Penalty Rationalisation Framework for Systemic Filing Non-Compliance is expected to generate Rs26 billion.

Expiring sales and income tax exemptions in tribal areas on imports have revenue implications of Rs23 billion.

Special excise duty on luxury items and high-end electric vehicles is expected to raise Rs20 billion, while higher withholding tax on sales of government securities is projected to generate Rs11 billion.

Minimum tax on the steel industry and trading houses is expected to have a revenue impact of Rs 10 billion.

Clause 46A, which introduces a minimum tax on the steel sector to create parity with other sectors, is projected to raise Rs5 billion.

Removal of withholding tax exemption on supplies by trading houses is also expected to generate Rs5 billion.

Other policy measures have revenue implications of Rs4 billion, while the tax rate on capital gains on shares of non-filers is expected to generate Rs2 billion.

The measure on toll manufacturing for informal customers is also projected to raise Rs2 billion in FY2026-27.