Pakistan's Finance Bill 2026 passes National Assembly with key tax adjustments

Pakistan's National Assembly has approved the Finance Bill 2026, a significant piece of legislation that introduces several changes to the country's fiscal policies. The bill's passage occurred after the opposition staged a walkout from the lower house of parliament.

Among the notable revisions, the government has decided to eliminate the proposed 20% Federal Excise Duty (FED) on mineral water, hydration drinks, and aerated beverages with artificial sweetener or low sugar content. This move is expected to provide relief to consumers and the beverage industry. Additionally, local airlines will now benefit from a sales tax exemption on the import or lease of aircraft and their parts, a measure initially limited to PIA but now extended to all domestic carriers.

The bill also introduces a revised structure for excise duties on imported electric vehicles (EVs). The duty will be calculated based on the vehicle's value in U.S. dollars. EVs valued at $75,000 or less will face no federal excise duty. However, those priced between $75,000 and $110,000 will be subject to a 30% duty, while vehicles exceeding $110,000 will incur a 40% duty.

Further adjustments include allowing traders with an annual turnover of up to Rs200 million to opt out of the fixed tax regime, provided they file a final certificate with the Tax Commissioner. The bill also grants tax exemptions for income derived from private equity and venture capital funds, aiming to encourage investment in these sectors. Supplementary grants for the outgoing fiscal year are slated for approval on Wednesday.