Taxes & enforcement: Finance Bill may introduce Rs1trn measures

ISLAMABAD: Finance Bill 2026 is likely to introduce tax policy and enforcement measures of nearly Rs 1 trillion in budget (2025-26) including federal excise duty (FED) on naphtha petroleum products, fixed sales tax regime on steel sector and harsh penalties on non-compliant taxpayers refusing digital integration, installation of production monitoring and point of sales (POS) system.

Sources told Business Recorder that the half of revenue has been estimated from enforcement measures and the remaining through policy measures, taking the total to nearly Rs 1 trillion.

The imposition of FED on the naphtha petroleum products is one of the major revenue measures for 2026-27.

READ MORE: TPO placed under FD through amendments to rules of business

The Finance Bill 2026 will amend Inland Revenue laws to make the Federal Board of Revenue (FBR) a total faceless entity from July 1, 2026 and this requires digital integration of taxpayers with the FBR’s systems specially production monitoring.

Finance Bill 2026 will impose extraordinary penalties on taxpayers, who would fail to comply with the digital integration and production monitoring from July 1, 2026.

The faceless Inland Revenue of the FBR will be launched from October 1, 2026, which requires immediate need of production monitoring at manufacturing premises of leading sectors. Besides, the implementation of the POS systems and digital integration will be done at any cost, sources said.

The faceless FBR is the top priory of the present government and faceless FBR center IR will be launched in October 2026.

The faceless system is not possible without digital integration and therefore harsh punishments are proposed for non-complaint taxpayers under the Finance Bill 2026.

The proposals are to impose 18 percent sales tax on solar panels, new items for charging sales tax on printed retail price basis and amend Sales Tax Act to tightened enforcement laws against sellers of illicit products including cigarettes in the market.

However, this is subject to the approval of the federal cabinet.

Sources told Business Recorder that the Prime Minister has recently held a meeting in this regard to improve coordination between federal and provincial governments to check illicit trade across Pakistan.

The major focus of the federal budget (2026-27) is to increase enforcement against non-compliant sectors and taxpayers.

The sales tax and income tax exemptions, expired on June 30, 2026, would not be extended in budget (2026-27).

According to sources, the federal government may make it mandatory from July 1 for manufacturers to print retail prices and the applicable 18 percent sales tax on the packaging of a wide range of consumer goods as well as home appliances such as refrigerators, air conditioners and washing machines. Most of the items of the fast moving consumer goods would be included in the Third Schedule of the Sales Tax Act.

The government has decided to introduce stricter measures in the upcoming fiscal year to broaden the tax net and curb sales tax evasion.

Copyright Business Recorder, 2026