Islamabad: In response to IMF requirements and to close funding shortfalls created by recent fiscal concessions, the federal government has proposed three new taxation measures aimed at generating PKR 36 billion. These proposals form amendments to the revised Finance Bill 2025–26 and were presented to Parliament for approval.
FBR Chairman Rashid Mahmood Langrial informed the National Assembly Standing Committee on Finance that these measures include:
Imposing 10% Federal Excise Duty (FED) on Day‑Old Chicks (DOC) in the poultry sector.
Raising company withholding tax on dividends from 25% to 29% when received from mutual funds deriving income from debt instruments.
Increasing withholding tax on profit from government securities for institutional investors (excluding individuals) from 15% to 20%.
The need for these measures arose after two recent concessions: a salary increase of 10% for public‑sector employees, costing approximately PKR 29–30 billion, and the reduction of GST on solar panels from 18% to 10%, which diminished projected revenue by PKR 6–8 billion. Together, these concessions produced a cost gap estimated between PKR 35–38 billion.
The International Monetary Fund (IMF), which has called for additional fiscal adjustments to remain within the agreed budget framework, had identified a shortfall that necessitated new measures amounting to PKR 36–38 billion. Langrial noted that six new measures were submitted to the IMF, of which three have now been approved.
Additional clarification provided to the finance committee noted that, following the solar panel GST reduction, the revised net revenue target stands at PKR 339.5 billion, compared to the original PKR 348 billion in the 2025–26 budget framework.
Langrial also informed that the Cabinet has approved a move to apply a 10% uniform tax rate on both imported and locally grown raw cotton, streamlining the previous tax treatment under the proposed bill.
These new fiscal steps accompany previously approved measures in the Finance Bill: PKR 312 billion in projected revenue gains through new taxation, and PKR 389 billion in enforcement-based recoveries for FY 2025–26.
The revised Finance Bill, including these additional taxes, has received preliminary approval from the National Assembly’s finance committee and incorporated several recommendations from the Senate finance committee.
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