Salient Features of Federal Budget 2026-27 (Detailed Version)

The Federal Budget 2026-27 introduces wide-ranging reforms in customs, income tax, sales tax, and federal excise laws. Below is the complete structured summary of major relief measures, revenue measures, and administrative reforms introduced for FY 2026-27.

Customs Act 1969 – Key Amendments

1. Tariff Rationalization (National Tariff Policy 2025-30)

• Reduction of Customs Duty from 20% to 15% and 10%.
• Reduction of 15% and 10% slabs to 10% and 5%.
• Reduction of 5% slab to 0% on selected industrial inputs.
• Reduction in Additional Customs Duty (ACD) across thousands of tariff lines.
• Regulatory Duty capped at 20% and rationalized.

2. Relief Measures

• Exemption of customs duty on agricultural machinery.
• Exemption on critical pharmaceutical APIs (cancer-related).
• Reduced duty on construction sector specialized vehicles.
• Exemptions for defence imports and SCO summit vehicles.

3. Compliance & Administrative Reforms

• Faceless adjudication introduced.
• Legal cover for cargo scanning.
• Stronger anti-smuggling provisions.
• Independent Case Scrutiny Committees introduced.

Sales Tax Act 1990 – Major Measures

Relief Measures

• Extension of exemption for electric vehicles till June 2027.
• Abolition of tampon tax.
• Exemption on aircraft parts imports for PIACL.
• Exemption on capital goods for refinery upgradation.

Revenue Measures

• Expansion of Third Schedule to ensure consumer price taxation.
• Withholding sales tax from unregistered buyers.
• Imposition of 3% VAT in specific cases.

Streamlining Measures

• Electronic invoicing system introduced.
• National Faceless Centre established.
• Algorithmic Settlement Mechanism implemented.

Income Tax Ordinance 2001 – Key Changes

Relief Measures

• Reduction in tax rates for salaried individuals.
• Abolition of deemed income tax (Section 7E).
• Super Tax abolished up to Rs. 500 million income.
• Reduction in advance tax on property transactions.
• Reduction in foreign remittance card tax to 0.5%.

Revenue Measures

• Withholding tax introduced on digital content creators.
• Revised minimum tax rate for distributors and wholesalers.
• Algorithmic cross-matching of banking and tax information.

Administrative Reforms

• National Faceless Centre for audit and assessment.
• Independent Case Scrutiny Committee introduced.
• Mandatory electronic filing and machine-readable financial statements.

Federal Excise Act 2005 – Updates

Relief Measures

• Reduction in Federal Excise Duty on foreign travel.
• Reduced FED on acetate tow.
• Exemption for WHO-compliant sports beverages.

Revenue & Streamlining Measures

• Imposition of FED on luxury vehicles and petroleum products.
• Faceless audit system introduced.
• Electronic monitoring and tracking of excisable goods.