ISLAMABAD:The government on Tuesday proposed over Rs415 billion worth of new tax measures to extract an additional Rs2.2 trillion from the sluggish economy by taxing digital earnings, online services, solar panels, and cars used by the middle class. It also proposed drastic reductions in import taxes to open the economy to foreign competition.
The Finance Bill 2025-26, kept secret from the media by cancelling the press briefing, shows the government favouring a 19th-century-style economy by giving some relief on property purchases while taxing 21st-century digital platforms. The bill also proposes banning economic transactions of ineligible persons, including the purchase of property, cars, and investments in securities where assets don’t match the purchase.
Despite promoting green energy, the government has imposed an 18% sales tax on imported solar panels, raised sales tax on 850cc cars from 12.5% to 18%, and introduced a Rs2.5 per litre carbon levy. A new levy has also been imposed on conventional cars to subsidise electric vehicles.
Through the finance bill, the government also amended various non-tax laws and introduced two new ones: the Digital Presence Proceeds Act, 2025, and the New Energy Vehicles Adoption Levy Act, 2025.
A senior tax official said the government proposed over Rs415 billion in tax measures: Rs292 billion from Federal Board of Revenue (FBR)-related steps, Rs111 billion by imposing a Rs2.5 per litre carbon levy on petrol, diesel, and furnace oil, and Rs9 billion from the levy on conventional cars. These are part of the plan to collect Rs2.2 trillion in additional taxes to hit the Rs14.13 trillion revenue target for FY26. The petroleum and carbon levy target is set at Rs1.47 trillion.
In a highly unusual move, the government aims to collect Rs64 billion by taxing digital and online platforms and courier services. The move appears to protect non-taxpaying retail businesses.
Digitally delivered services are defined as those delivered via the internet or electronic networks with minimal or no human input. These include music, video and audio streaming, cloud services, software, telemedicine, e-learning, online banking, architectural design, research and consultancy, digital accounting, and other online facilities. E-commerce is defined as buying or selling goods and services over computer networks via websites, apps, or platforms that allow digital ordering, including via phones, tablets, or automated systems.
