Pakistan Budget 2026-27 Tax Changes — Confirmed Guide

Pakistan's federal budget 2026-27, presented in June 2026, is no longer just a proposal — according to the gazette, the Finance Act 2026 (Act No. XLIII of 2026) received the President's assent on 26 June 2026, and it has been in force since 1 July 2026. According to the Finance Division's Budget in Brief 2026-27, total federal budget spending is about Rs 18.77 trillion. It contains important tax changes for the salaried class, businesses and the property sector — all three.

This guide is a wide-lens overview of all those confirmed changes. If you only want the full detail of the salary tax slabs, see our Budget 2026-27 Salary Tax Relief guide — it has every slab, worked examples and the calculator.

Salary Tax — Quick Summary

The most discussed change is the tax relief for the salaried class. The slabs were restructured, new intermediate brackets were added, and the threshold for the 35% top rate was raised from Rs 4.1 million to Rs 7 million:

• Rs 2.2 – 3.2 million: down from 23% to 20%.
• Rs 3.2 – 4.1 million: down from 30% to 25%.
• The old single 35% band (which started at Rs 4.1 million) is now split into three separate steps: 29% (Rs 4.1M–5.6M), 32% (Rs 5.6M–7M), and 35% only above Rs 7 million.
• Surcharge (section 4AB): the 9% surcharge on salaried people with taxable income above Rs 10 million is abolished. The 10% surcharge continues for other individuals and AOPs (FBR Circular No. 2 of 2026-27).
• The three lower slabs (up to Rs 2.2 million) are completely unchanged.

Super Tax (Section 4C) — Relief for Business

• Businesses with income up to Rs 500 million: super tax abolished entirely (in Tax Year 2026 there was a tiered rate of 1% to 7.5% above Rs 150 million).
• Above Rs 500 million: the rate comes down from 10% to 8%.
• Exclusion — three categories: a banking company; a person whose income is computed under Part I of the Fifth Schedule (that is, oil & gas exploration and production); and a person earning income from the sale of any kind of fertilizer. These pay a flat 10% once income exceeds Rs 150 million. The old tiered structure remains for no one — the Finance Act 2026 substituted the whole Division IIB Table. Note: the law says “sale of any kind of fertilizer”, so not only manufacturers — dealers and sellers are covered too.
• A separate exemption for exporters: under the new clause (104B), Part IV, Second Schedule, Section 4C does not apply at all if the tax year's export proceeds are more than 80% of total turnover.

Changes to Property Tax

There are three big changes for the property sector — work out your own figures on our Property Tax Calculator; here are only the headline points:

• Section 7E (deemed income tax) abolished — under it, 5% of the fair market value of capital assets other than one asset was treated as deemed income and taxed at 20% (about 1% of the value), whether or not there was any actual income. According to FBR's Circular No. 2 of 2026-27, the Finance Act 2026 omitted section 7E and also removed its rate schedule Division VIIIC.
• Advance tax on selling property (Section 236C): now a flat 2.75% for filers (the old sliding scale was 4.5% to 5.5%). A flat 11.5% for non-filers — “flat 2.75%” is only for filers, not universal.
• Advance tax on buying property (Section 236K): now a flat 1.25% for filers (at every value tier). For non-filers the rate is tiered by property value: from 10.5% (≤Rs 50M) to 14.5% (Rs 50M–100M) to 18.5% (>Rs 100M) — according to FBR's TY2027 withholding rate card.

Mobile Phone Tax (PTA) — What Actually Changed?

• Regulatory duty came down: under SRO 1064(I)/2026 (from 1 July 2026), the RD for each price band is 20% lower than under the previous SRO — for example, Rs 17,600 instead of Rs 22,000 on a phone above $500.
• Payment in instalments: the Finance Act 2026 added a new condition to the Ninth Schedule of the Sales Tax Act allowing PTA tax to be paid in instalments — all instalments must be completed within the financial year of import.
• Sales tax stayed the same: under Ninth Schedule Table-II, 18% ad valorem on phones up to $500 and 25% above $500.

See the full calculation for your phone on our PTA Mobile Tax Calculator.

Other Notable Changes

• Advance tax on foreign card payments: on international debit, credit and prepaid cards (Division XXVII), the rate comes down from 5% to 0.5% for filers.
• IT exports concessional rate: the reduced 0.25% rate for PSEB-registered IT and IT-enabled services exporters, which ran to Tax Year 2027, is now extended to Tax Year 2029 (Division IVA).
• Withholding on exports: advance tax on exports under Division IV was set at 1.25% (minimum tax), and exporters' separate 1% adjustable advance tax under section 147(6C) was abolished.
• Late filers' ATL surcharge raised: under section 182A, late filers now pay individual Rs 25,000, AOP Rs 50,000 and company Rs 100,000 to get on the ATL (previously Rs 1,000 / 10,000 / 20,000). An individual can instead give an undertaking not to buy property for 6 months (section 182A(3)).

The Revenue Target and the IMF Context

According to the Finance Division's Budget in Brief 2026-27 (Table 5), the budget estimate for FBR taxes in FY2026-27 is Rs 15,264 billion. The FY2025-26 revised estimate was Rs 12,983 billion, so the new target is about 17.6% higher. Pakistan is currently in the IMF's Extended Fund Facility programme, but rates and slabs are set by Parliament through the Finance Act — details in our IMF and tax policy guide.

Despite such a large target, the salaried class was given relief. Tax on salary is deducted at source (section 149), so this is the part of the budget where relief shows up directly in monthly take-home pay.

Frequently Asked Questions