Sindh Cuts Infrastructure Cess After Two Decades to Settle Disputes

The Sindh government has reduced the infrastructure development cess to between 0.80 percent and 0.85 percent under a new law aimed at resolving long-standing litigation and improving revenue collection efficiency.

The amendment to the Sindh Development and Maintenance of Infrastructure Cess Act, 2017 introduces a “Settlement Agreement” mechanism, allowing businesses to settle outstanding or disputed liabilities with the government under revised rates.

The move comes after years of legal disputes and administrative challenges, as many businesses had contested cess liabilities, leading to delays in revenue realization and increased uncertainty. Officials said the new framework is designed to bring clarity and encourage compliance.

Under the scheme, eligible businesses can enter into settlement agreements within two months of the law’s enforcement, with a possible extension of up to six months in specific cases. Participation requires unconditional withdrawal of all pending litigation and waiver of claims against the government.

The law also outlines a structured payment plan, with 15 percent of liabilities payable in July 2026, another 15 percent in October 2026, and a further 15 percent in July 2027. The remaining amount will be paid in 48 equal quarterly installments starting from July 2028.

Businesses opting for full upfront payment by July 15, 2026 will benefit from a reduced cess rate of 0.80 percent until June 2029, after which the rate will be 0.85 percent unless revised.

The government said the reform is intended to reduce litigation, streamline administration, and create a more predictable environment for businesses while ensuring steady infrastructure related revenue for the province.