President Signs Finance Act 2026 as Rs. 1.02 Trillion Tax Measures Take Effect July 1

President Asif Ali Zardari has signed the Finance Act 2026 into law, clearing the way for tax, tariff, and enforcement measures worth Rs. 1.02 trillion to take effect from July 1 as the government seeks to achieve its ambitious revenue target of Rs. 15.264 trillion for fiscal year 2026-27.

The Finance Act 2026 was approved by the president on the advice of Prime Minister Shehbaz Sharif after the National Assembly Secretariat forwarded the bill for assent a day earlier.

The new law combines fresh taxation measures with import stage duty reductions worth Rs. 143.4 billion, including cuts in Customs Duty, Additional Customs Duty, and Regulatory Duty, alongside revisions to exemptions under the Fifth Schedule.

Among the largest revenue generating initiatives, the Taxpayer Services and Facilitation Enhancement Programme is projected to contribute Rs. 144 billion, followed by expansion of the Third Schedule of the Sales Tax Act with an estimated impact of Rs. 91 billion.

The government expects the Faceless Auto Tax Office and algorithmic settlement system to generate Rs. 85 billion, while the Production Data Integration and Real Time Sectoral Verification Framework is projected to raise another Rs. 85 billion. The Retailer Formalisation and POS Integration Scheme is estimated to contribute Rs. 82 billion and the Supply Chain Digitalisation Policy Rs. 75 billion.

Other notable measures include a Rs. 45 billion impact from ADR led revenue realization initiatives, Rs. 43 billion from the Conditionality Framework for High Value Economic Participation, and Rs. 40 billion from higher sales taxes targeting misuse of industrial imports.

The Finance Act also introduces a windfall tax on refineries expected to generate Rs. 36 billion and increases the minimum turnover tax for certain distributors from 0.25 percent to 0.5 percent, a move estimated to bring in Rs. 35 billion.

Additional measures include Rs. 33 billion from risk based customs valuation, Rs. 31 billion from the expiry of reduced sales tax on hybrid vehicles, Rs. 29 billion from federal excise duty on petroleum products used for adulteration, and Rs. 28 billion from withholding tax on purchases from unregistered entities.

The government has also projected revenues from higher withholding taxes on services, the expiry of tax exemptions in tribal areas, special excise duties on luxury goods and high end electric vehicles, and minimum tax measures for the steel sector and trading houses.