Tax relief, Super Tax cuts to boost PSX sentiment: experts

KARACHI: The budget has been largely viewed as positive for the equity market, with analysts highlighting tax relief measures, lower super tax rates, reduced withholding taxes on investment income and continued incentives for key sectors as major positives for listed companies and investors.

According to the Topline Securities’ assessment, the budget contains several measures that could support market sentiment and corporate profitability, though the ambitious revenue collection targets may remain challenging to achieve.

One of the most significant announcements for the listed companies is the reduction in the super tax burden. The government has proposed removing six lower super tax slabs and reducing the maximum super tax rate from 10 percent to eight percent for corporations and high-income individuals earning above Rs500 million. Analysts believe the measure will directly improve earnings outlook for several large-cap listed companies.

The budget also proposes a reduction in withholding tax rates on dividends and capital gains from various financial instruments. According to Ismail Iqbal Securities, withholding tax rates are proposed to be reduced by 1.25 percentage points, providing additional support to equity investors and improving the attractiveness of stock market investments.

The salaried class has also received tax relief, although meagre, through lower income tax rates across various income slabs. Market participants believe the move could increase disposable incomes and indirectly support investor participation in financial markets.

For the export-oriented sectors, the government has reduced the combined tax burden on export proceeds from 2 percent to 1.25 percent. Analysts expect the measure to benefit listed textile exporters and other export-driven companies by enhancing competitiveness and profitability.

The information technology sector emerged as another major beneficiary, with the government extending the income tax exemption regime until June 2029. Brokerage houses noted that the extension is positive for listed technology companies, particularly those generating significant export revenues.

Industrial manufacturers are also expected to benefit from customs duty reductions on 92 tariff lines covering key raw materials and industrial inputs. Tariff rationalization is likely to lower production costs and support margins across various sectors listed on the Pakistan Stock Exchange (PSX).

In addition, the government has reduced withholding tax on international debit and credit card transactions from 5 percent to 0.5 percent and abolished Capital Value Tax (CVT) on foreign assets, measures that analysts believe would improve the overall investment environment.

Topline Securities noted that the combination of super tax reduction, dividend and capital gains tax relief, export incentives and industrial tariff rationalization could generate a positive reaction from the equity market.

However, analysts cautioned that the government’s ambitious FBR tax collection target of Rs15.26 trillion, representing an 18 percent year-on-year increase, would remain a key challenge. Market participants will closely monitor the implementation of revenue measures and their impact on corporate earnings during FY27.

Overall, the brokerage houses described the budget as broadly market-friendly, with several measures expected to support corporate profitability, investor returns and valuation multiples across the PSX.

Copyright Business Recorder, 2026