In discussions with the International Monetary Fund (IMF), the federal government has put forward a proposal to lower duties on imported vehicles, auto parts, and industrial raw materials in the upcoming 2025-26 budget, according to official sources.
The proposal includes scrapping the current 2 per cent additional customs duty on auto spare parts. Additionally, the government is looking into reducing customs duty brackets, currently between 4 and 7 per cent, through a phased approach.
A notable plan under review is a 20 per cent reduction in customs duties on imported vehicles, which are presently taxed at rates ranging from 15 to 90 per cent.
To support industrial expansion and boost exports by up to $5 billion, the government is also considering tax relief on raw materials used across several sectors such as textiles, chemicals, plastics, auto components, iron, and steel.
There are plans to lower duties on semi-finished goods and key industrial inputs to help local industries grow.
Sources also indicated that the real estate sector might see a 0.5 per cent drop in the withholding tax applied to buying and selling property.
For the next fiscal year, the Federal Board of Revenue (FBR) has been given a proposed tax collection target of Rs. 14,305 billion.
Out of this, Rs600 billion is expected to come from stricter enforcement of current tax laws, while Rs400 billion is projected through new policies.
In a significant move, the government also intends to start collecting tax on agricultural income beginning July 1, 2025.
All the while, the IMF continues to press Pakistan to expand its tax base and bring more of its informal economy into the tax net.