Federal budget changes tax on e-commerce, property, and imported goods

Islamabad: The federal government has provided relief to the salaried class in the budget for the fiscal year 2025-26, while on the other hand, it has laid the foundation for a new wave of inflation by increasing taxes on several items and sectors. The budget has made many imported and luxury items, including solar panels, vehicles, beverages, mineral water, chocolates, coffee, and pet food, more expensive.

The most attention-grabbing proposal is to impose an 18 percent General Sales Tax (GST) on the import of solar panels, which will not only make solar systems more expensive but may also affect the government’s policy of promoting solar energy to deal with the power crisis in the summer.

Luxury items expensive, common consumers affected

Finance Minister Muhammad Aurangzeb announced that taxes have been increased on non-essential or luxury items such as chocolates, coffee, animal feed, beverages, and bottled water to reduce their imports and promote the local industry. The prices of these items are expected to increase significantly in the coming days.

Tax bill on online purchases

E-commerce and online shopping have also been brought into the tax net in the Budget 2025-26. Now, it has been proposed to levy a 2 percent sales tax on goods and services ordered digitally. In addition, e-commerce platforms, courier services, and payment processing companies will be required to submit transaction data and tax reports to the FBR every month.

Mixed message for the property sector

Some relief has also been given in the budget for the property sector. Tax credit will be given on houses up to 10 marla and flats up to 2,000 square feet. Similarly, it is proposed to reduce stamp duty on the purchase of property in Islamabad from 4 percent to 1 percent.

However, the overall withholding tax rate on property purchases and sales has also been reduced:

• First slab: reduced from 4% to 2.5%
• Second slab: reduced from 3.5% to 2%
• Third slab: reduced from 3% to 1.5%

Partial reduction in super tax

The super tax rate has been reduced by 0.5% for individuals or entities with an annual income of Rs 200 million to Rs 500 million. This move is being seen as a relief for investors and large companies.