ISLAMABAD:The federal government is finalizing structural changes for the upcoming fiscal year's budget, focusing heavily on widening the tax net and enhancing revenue collection. According to official sources, significant policy shifts are anticipated across business operations and the import sector. Prime Minister Shehbaz Sharif reiterated that while fiscal consolidation and expanding the tax base remain crucial, the government is parallelly introducing targeted relief measures for trade and industry.
Export-Led Growth: Abolition of 1% Advance Tax for Exporters
In a major move to stimulate domestic exports, the government is considering a proposal to abolish the 1% advance tax currently levied on exporters. Sources reveal that additional fiscal incentives and tax relief packages have been recommended to optimize manufacturing output and lower the cost of doing business for the export sector.
Import Duty Reductions on Cosmetics, Skincare, and Machinery
The upcoming budget is expected to extend customs duty rationalization to several consumer goods and commercial machinery:
Cosmetics & Cosmetics Raw Material: Import duties on makeup products are proposed to be slashed from 44% to 40%.
Commercial Equipment: Tax relief is on the cards for specialized machinery imported by beauty parlors, health/fitness centers, and clinical facilities.
Personal Care Products: Duties on everyday personal care items—including sunblock, sunscreen, shaving cream, aftershave, and body lotions—are recommended for reduction, likely lowering retail prices.
Enhancing Sales Tax Compliance: Mandatory Retail Price Printing
To ensure rigorous sales tax compliance and streamline revenue documentation, the government plans to enforce strict retail packaging rules. It will be legally mandatory to print retail prices on essential consumer food items, including infant formula milk, ketchup, ghee, cooking oil, and packaged tea. This step aims to capture real-time sales data and plug revenue leakages at the retail stage.
Doubling Climate Levy and Phasing Out Tax Exemptions
To fund environmental initiatives and meet revenue targets, the government is considering doubling the Climate Levy on petroleum products from Rs. 2.5 to Rs. 5 per liter. Furthermore, proposals have been drafted to phase out or eliminate certain transitional tax exemptions previously granted to the newly merged districts (formerly FATA/PATA).
The final approval and statutory execution of these budgetary proposals will be officially unveiled during the formal presentation of the Federal Budget in the National Assembly.