The federal government is expected to reduce the minimum value-added sales tax on coal imports from 3 percent to 1 percent in the Budget 2026-27, a move aimed at lowering costs for industries that rely heavily on imported coal as a key raw material.
Sources told ProPakistani that the proposed tax relief is intended to reduce the financial burden on manufacturers by easing working capital requirements and lowering production costs. The measure is expected to benefit sectors such as cement, power generation, and other energy-intensive industries that depend on imported coal for their operations.
At present, coal imports are subject to a 3 percent minimum value addition tax at the import stage under the Twelfth Schedule of the Sales Tax Act, 1990. The proposed reduction would cut that rate by two percentage points, potentially improving cash flows for businesses and reducing the cost of imported inputs.
Industry stakeholders have long argued that rising energy prices, higher financing costs, and elevated input expenses have squeezed margins and reduced competitiveness. The expected tax cut is being viewed as part of broader efforts to support industrial activity and ease cost pressures across key manufacturing sectors.
The cement industry is likely to be among the biggest beneficiaries of the proposed measure. Coal remains one of the sector’s largest production costs, and lower import taxes could help reduce operating expenses at a time when manufacturers are navigating weak domestic demand and increasing competition in export markets.
The proposal is expected to be unveiled as part of the federal budget for FY2027, which is set to be presented today. If approved, the reduction could provide immediate relief to coal-importing industries while supporting broader efforts to stimulate industrial growth and improve competitiveness.
