ISLAMABAD – Pakistan’s export sector may finally be in line for some relief as the federal government prepares to unveil Budget 2026, and policymakers are looking to axe 1% export tax and introduce measures aimed at easing pressure on exporters, signaling a possible shift towards supporting growth and boosting competitiveness in overseas markets.
A series of tax relief measures are on table for salaried individuals and exporters in the upcoming Budget 2026-27, while proposed tax increases on solar panels and stationery items are unlikely to be implemented, sources said.
Sharif led government is reviewing a plan to increase the income threshold for the highest tax slab applicable to salaried taxpayers. The move is aimed at providing relief to higher-income employees who have faced a growing tax burden in recent years.
Sources said authorities are also examining a proposal to abolish the additional surcharge currently imposed on top earners, a measure that could further reduce tax liabilities for a segment of salaried taxpayers.
The export sector is also expected to receive support under the new budget. Officials say the government is considering withdrawing the 1% export tax as part of efforts to improve liquidity and competitiveness for exporters.
The proposed relief comes after exporters were shifted from Final Tax Regime (FTR) to Normal Tax Regime (NTR) through the Finance Act 2024. Under the revised framework, the previous 1% turnover tax was replaced with a minimum 2% tax on export income, comprising 1% minimum tax and 1% advance tax.
Exporters and industrial associations have urged the government to restore the Final Tax Regime on an optional basis with a 1% turnover tax. They have also called for faster processing of sales tax refunds and additional tax relief for businesses facing losses.
Stakeholders have further proposed the establishment of a dedicated committee to address concerns regarding tax administration and to protect compliant taxpayers from unnecessary enforcement actions. Meanwhile, government sources indicated that no major changes are expected in the taxation of solar panels, stationery products and the stock market in the upcoming fiscal year.
A proposal to increase the sales tax on solar panels from 10% to 18% has reportedly been withdrawn, while a planned increase in sales tax on stationery items is also unlikely to form part of the final budget proposals. Similarly, sources said the existing tax regime for the stock market is expected to remain unchanged from July 1, 2026.
The decisions will be announced when Finance Minister presents Federal Budget 2026-27, although current proposals suggest the government is seeking to provide targeted relief to key sectors while avoiding additional tax burdens on consumers and investors.
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