ISLAMABAD: The federal government is expected to unveil a business-friendly Budget 2025–26, with significant tax relief measures aimed at boosting the construction sector and supporting industrial imports.
Sources indicate that the government is likely to reduce additional regulatory duties on over 3,500 imported items. In addition, a 2% to 3% reduction in customs duties on various imported goods is under consideration to lower production costs for local industries.
To further ease the burden on manufacturers, proposals are being reviewed to either reduce or abolish the withholding tax on imported raw materials. These changes are expected to benefit the industrial sector by improving input affordability and competitiveness.
The budget is also expected to bring a phased reduction in super tax for large companies. Companies earning up to Rs150 million annually will continue to be exempt. For those with profits of Rs200 million, the super tax rate may be reduced from 1% to 0.5%, while companies earning Rs250 million could see a drop from 2% to 1.5%. Firms reporting Rs300 million in profits will likely continue paying the existing 4% rate. The overall super tax structure for the broader corporate sector is expected to remain unchanged.
The construction industry is poised to gain from these measures, particularly through reduced import duties on raw materials and a possible cut in withholding tax, which may help stimulate growth in the sector.
On the other hand, prices for small cars may rise. The government is considering an increase in GST on locally manufactured vehicles with engine capacities up to 850cc, raising the rate from 12.5% to 18%. This move could impact affordability in the entry-level automobile market.
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