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Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. •

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Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. •

Finance Bill 2026: Comprehensive Briefing on Financial Proposals and Legal Amendments

The Finance Bill 2026 outlines a series of comprehensive amendments to existing financial laws, primarily aimed at enhancing revenue collection, digitizing tax administration, and tightening enforcement mechanisms.

Mah Noor
June 12, 2026
Tax Toolkit

The Finance Bill 2026 outlines a series of comprehensive amendments to existing financial laws, primarily aimed at enhancing revenue collection, digitizing tax administration, and tightening enforcement mechanisms. Commencing on July 1, 2026, the Bill introduces significant changes to the taxation of motor vehicles in the Islamabad Capital Territory (ICT), updates the regulatory framework for petroleum levies, and implements “faceless” tax administration across customs and sales tax sectors.

Download Finance Bill 2026-27 in PDF

Critical takeaways include:

Digital Transformation: The establishment of a National Faceless Centre and the use of algorithmic settlement mechanisms to handle audits, assessments, and appeals without physical interaction.
Enhanced Enforcement: Substantial increases in penalties for non-compliance, the creation of a “simulated invoice issuers register” to combat tax fraud, and the introduction of a Climate Support Levy.
Administrative Oversight: The formation of Independent Case Scrutiny Committees to vet legal appeals before they reach the High Courts or the Supreme Court.
Sectoral Adjustments: Shift in motor vehicle taxation from fixed rates to percentages of invoice values for higher-capacity engines and the inclusion of various retail-packed food items under the Third Schedule of the Sales Tax Act.

1. Amendments to Motor Vehicle Taxation (ICT)

The Bill substitutes several tables in the West Pakistan Motor Vehicles Taxation Act, 1958, specifically for the Islamabad Capital Territory. The new rates transition higher-capacity private vehicles from fixed fees to value-based taxation.

Token Tax on Private Motor Vehicles

Engine Capacity	Tax Rate for ICT
Up to 1000 CC	20,000 (Fixed)
1001 CC to 1300 CC	0.25% of Invoice Value
1301 CC to 1500 CC	0.25% of Invoice Value
1501 CC to 2000 CC	0.25% of Invoice Value
2001 CC to 2500 CC	0.35% of Invoice Value
2501 CC and above	0.35% of Invoice Value

Commercial and Public Service Vehicles

Motor Cabs: Rates range from 600 (up to 1000cc) to 4,200 (exceeding 2500cc).
Public Service Vehicles: Taxed per seat per annum, ranging from 350 (8-seater) to 850 (52-seater).
Commercial/Loading Vehicles: Rates are based on laden weight, scaling from 500 (up to 1250 kg) to 24,000 (trailers exceeding 16000 kg).

2. Petroleum Products and Levies

Significant revisions to the Petroleum Products Ordinance, 1961, introduce the Climate Support Levy and streamline the recovery process for unpaid dues.

Levy as License Condition: Payment of the Petroleum Levy and Climate Support Levy is now a mandatory condition of licenses issued by OGRA for all companies, refineries, and licensees.
Recovery Power: If levies remain unpaid for ninety days, the Commissioner (Inland Revenue) can be requested to recover arrears in the same manner as income tax. Crucially, the Commissioner is barred from granting time extensions or allowing installment payments.
Late Payment Surcharge: Defaults on payments will incur a surcharge as specified under the Public Finance Management Act, 2019.
Mandatory Reporting: Companies must submit monthly statements of levy payments supported by sales invoices and provide an annual audited certificate from an Authorized Audit Firm (registered with the Audit Oversight Board).

3. Customs Act Reforms

The Bill prioritizes modernization through scanning technology and faceless adjudication, while also increasing penalties for smuggling and related offenses.

State Warehouses: A new category of “State warehouse” is defined for storing detained, seized, or confiscated goods.
Modernized Examination: Section 80 is amended to allow for the scanning of goods in addition to physical examination.
Faceless Adjudication: The Board is authorized to notify procedures for adjudication proceedings conducted via virtual modes, eliminating face-to-face interaction.
Asset Freezing: Special Judges are empowered to order the freezing of assets of an accused person if there are reasonable grounds to believe an illegal transfer of funds occurred.
Penalty Increases: The penalty for certain offenses (S.No 7A) is increased from 500,000 to ten million. Tampering with goods in a State Warehouse can lead to a penalty of twice the goods’ value and up to five years of imprisonment.
Jurisdictional Clarification: Other authorities seizing goods must deposit them with customs once confirmed as liable for confiscation.

4. Sales Tax and Digital Integration

The Sales Tax Act, 1990, undergoes the most extensive changes, focusing on digital monitoring and algorithmic administration.

National Faceless Centre (NFC)

The NFC will perform functions of audit, assessment, and quality control through electronic means.

Confidentiality: The identity of officers (including facial and voice identity during E-hearings) must be kept confidential from the taxpayer.
Algorithmic Assignment: Jurisdictions and specific cases will be assigned to officers via algorithms developed by the Board.

Algorithmic Settlement Mechanism

A new digital mechanism allows for the settlement of tax proceedings before a final order is issued.

Criteria: Settlement offers are generated based on the stage of proceedings, compliance history, and the nature of the discrepancy.
Effect: Accepting and paying a settlement offer within ten days abates the specific issues raised in a notice or audit report.

Enforcement and “Simulated Invoices”

Simulated Invoice Issuers Register: A public register will list persons issuing fictitious or simulated invoices.
Automatic Reversals: Any input tax credit claimed by a counterparty from a listed issuer will be automatically reversed and treated as inadmissible.
Digital Integration: Businesses must integrate with the Board’s computerized system for real-time monitoring. Failure to integrate can result in penalties up to five million rupees and the sealing of premises.
Production Monitoring: Goods must be affixed with tax stamps, barcodes, or labels. Non-compliant goods are liable to seizure and confiscation.

Revised Thresholds and Valuation

Tier-1 Retailers: The turnover threshold for certain retailers to be classified as Tier-1 is set at more than 200 million rupees.
Valuation: The Board may use Pakistan Bureau of Statistics (PBS) valuations or outsource valuation functions to third parties.

5. Judicial and Administrative Oversight

A major structural change introduced in both the Customs and Sales Tax sections is the creation of Independent Case Scrutiny Committees.

Mandatory Approval: No civil petition, reference, or review can be filed in the High Courts, Federal Constitutional Court, or Supreme Court by tax authorities without the prior approval of this committee.
Committee Composition:
1. A retired Judge of the superior judiciary (Chairman).
2. An advocate with at least 15 years of experience in tax/commercial litigation.
3. A senior serving or retired officer (BS-20 or above for Inland Revenue; Director/Collector for Customs).
Binding Nature: The committee’s recommendations are binding on the relevant Collector or Commissioner.
Legal Immunity: Members of the committee are granted immunity from suits or legal proceedings regarding their decisions.

6. Expansion of the Third Schedule (Sales Tax)

The Bill expands the list of items subject to tax on retail price by adding several consumer goods:

Vegetable and animal fats and oils (retail packing).
Sugar confectionery (retail packing).
Pasta, spaghetti, macaroni, noodles, and couscous.
Sauces, ketchup, mixed condiments, and seasonings.
Fermented beverages.

Mah Noor

An aspiring Chartered Accountant with a growing footprint in Pakistan’s tax education and digital finance content landscape. Currently, I work as the Editor-in-Chief at TaxationPk, where I lead content strategy, quality control, and editorial planning for tax-related blogs, news articles, and social media outreach.

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