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Budget 2026-27
How exactly has Pakistan's tax policy changed from FY 2025-26 to FY 2026-27? This guide answers that question comprehensively, placing every significant tax change side-by-side so you can see precisely what has changed, by how much, and what it means for salaried employees, businesses, IT professionals, property buyers, and small retailers.
The overarching story is a decisive pivot: the previous budget was shaped by the constraints of stabilisation — a necessity to raise revenue and satisfy external creditors. Budget 2026-27 is presented from a position of recovered confidence, allowing the government to shift from extraction to stimulation. Every comparison below tells that story in numbers.
For the full detail of what's new, see our Budget 2026-27 Tax Proposals guide. For the big-picture overview, read our Complete Budget 2026-27 Overview.
📊 Master Comparison Table — Budget 2026-27 vs 2025-26
| Tax Measure | 2025-26 | 2026-27 | Change |
|---|---|---|---|
| Salaried Tax: 22–32 lac bracket | 23% | 20% | ↓ 3% |
| Salaried Tax: 32–41 lac bracket | 30% | 25% | ↓ 5% |
| Salaried Tax: 41–56 lac bracket | 35% | 29% | ↓ 6% |
| Salaried Tax: 56–70 lac bracket | 35% | 32% | ↓ 3% |
| Super Tax (salaried high earners) | 6% | 0% (Abolished) | ↓ 6% |
| Standard Corporate Tax Rate | 29% | 20% | ↓ 9% |
| Small Business Tax Rate | 20% | 10% | ↓ 10% |
| Banking 1% Additional Tax | Applicable | Abolished | Removed |
| IT Export FTR (0.25%) | Expiring Jun 2026 | Extended to Jun 2029 | +3 years |
| General Exporter Tax Burden | ~2% | 1.25% | ↓ 0.75% |
| Card Transaction WHT | 5% | 0.5% | ↓ 4.5% |
| Property Purchase WHT (filers) | 2.5% | 1.25% | ↓ 1.25% |
| Property Sale WHT (filers) | 5.5% | 2.75% | ↓ 2.75% |
| Mandatory ADR (banks) | 50% | 25% | ↓ 25% |
| ADR Penalty Tax | 10% additional | Abolished | Removed |
| Small Retailer Tax Scheme | Complex / coercive approach | 1% fixed turnover tax (new) | New scheme |
The salaried income tax comparison between the two budgets shows one of the deepest structural reductions in recent memory. In 2025-26, high middle-income brackets were subjected to rates of 30%–35% — rates that the government itself acknowledged were driving tax avoidance and pushing high earners toward informal arrangements. Budget 2026-27 corrects this aggressively.
| Annual Income (PKR) | Rate in 2025-26 | Rate in 2026-27 | Your Saving |
|---|---|---|---|
| Up to 6 lac | 0% | 0% | — |
| 6 lac – 12 lac | 1% | 1% | — |
| 12 lac – 22 lac | 11% | 11% | — |
| 22 lac – 32 lac | 23% | 20% | PKR 30,000/year saved |
| 32 lac – 41 lac | 30% | 25% | PKR 45,000/year saved |
| 41 lac – 56 lac | 35% | 29% | PKR 90,000/year saved |
| 56 lac – 70 lac | 35% | 32% | PKR 42,000/year saved |
Savings are illustrative for income at the top of each bracket. Use our Income Tax Calculator for your exact figure.
The cumulative effect for a high-middle-income earner, such as a mid-career IT professional or corporate employee earning PKR 60 lac annually, can be a saving of over PKR 100,000 per year when slab cuts and super tax abolition are combined.
The three-year journey of the super tax is the clearest narrative of Pakistan's shifting fiscal posture:
The abolition is particularly meaningful for Pakistan's IT sector, where high-skilled engineers and managers were among the most affected. Combined with the slab reductions, this removes an entire double layer of taxation from the salaried professional class. To calculate your new take-home salary, use our Salary Calculator.
The contrast in corporate tax philosophy between the two budgets could not be more stark.
In 2025-26, the standard corporate income tax rate was 29%. Budget 2026-27 proposes 20%. This nine-percentage-point reduction in a single year is extraordinary and transforms Pakistan's position as an investment destination. For context, 20% now aligns Pakistan with or near the rates of several regional peers.
| Corporate Tax Type | 2025-26 | 2026-27 | % Change |
|---|---|---|---|
| Standard Companies | 29% | 20% | ↓ 31% reduction |
| Small Businesses (non-banking) | 20% | 10% | ↓ 50% reduction |
| Banking Surcharge (additional 1%) | Applicable | Abolished | Fully removed |
One of the most consequential differences between the two budgets relates not to a rate change but to the removal of existential policy uncertainty for Pakistan's IT sector.
In 2025-26, the Final Tax Regime (FTR) at 0.25% for IT and IT-enabled services export income was approaching its June 30, 2026 expiry date. This created significant anxiety among software houses, digital agencies, and hundreds of thousands of freelancers. Businesses cannot invest and expand when a core tax concession may vanish in months.
Budget 2026-27 eliminates that uncertainty entirely — extending the FTR at 0.25% until June 30, 2029. This is three years of policy certainty that the previous budget could not offer. For Pakistan's freelancers and IT exporters, this single change could be the most practically impactful measure in the entire budget.
The approach to the real estate sector has shifted fundamentally between the two budgets.
In 2025-26, the government maintained withholding taxes on property transactions at rates that — while not prohibitive — treated real estate primarily as a revenue source. In 2026-27, the government has repositioned the sector as a driver of economic activity deserving of fiscal stimulus.
| Property Transaction | WHT in 2025-26 | WHT in 2026-27 | Reduction |
|---|---|---|---|
| Purchase — Tax Filer | 2.5% | 1.25% | 50% cut |
| Sale — Tax Filer | 5.5% | 2.75% | 50% cut |
Halving transaction costs makes the property market more liquid and encourages documented transactions — a double win for economic activity and tax documentation. For property tax tools, use our Stamp Duty Calculator and Capital Gains Tax Calculator.
Perhaps the most symbolically important year-on-year change is the card transaction withholding tax.
In 2025-26, a 5% withholding tax on credit and debit card transactions was in place. This rate effectively penalised documented digital payments — the very transactions the government wanted to encourage. It pushed businesses and consumers toward cash, which is the opposite of documentation and economic formality.
Budget 2026-27 reduces this to 0.5% — a tenfold reduction. This is not merely a rate adjustment; it is a full reversal of the policy direction. The government is now actively incentivising digital payments rather than taxing them at a punitive rate.
In 2025-26, banks were required to maintain an Advance to Deposit Ratio (ADR) of 50%, with a punitive 10% additional corporate tax if they failed to meet this threshold. This policy was well-intentioned but badly implemented — it pushed banks toward government securities rather than private sector loans, actually worsening the credit environment.
Budget 2026-27 corrects this: the ADR requirement is relaxed from 50% to 25%, and the penalty tax is completely abolished. This is a meaningful reversal that should improve the flow of private sector credit — and lower borrowing costs over time.
The most philosophical shift between the two budgets is in how the government approaches Pakistan's vast informal retail sector.
In 2025-26, the approach relied on coercive mechanisms — mandatory POS machine installations, the threat of audits, complex filing requirements, and inspector visits. The result: mass non-compliance, harassment, and continued informality.
Budget 2026-27 introduces the Fixed Tax Scheme under Section 99B — a completely different model based on simplicity and mutual respect. A flat 1% on sales, one-page return, no audit, no POS requirement, and a green QR certificate that legally protects the shopkeeper from unauthorized tax inspector visits. This is not a minor tweak; it is a reimagining of the relationship between FBR and the informal retail sector. For the complete breakdown, read our Budget 2026-27 Tax Proposals guide.
💡 Calculate Your Tax Saving
Use HisaabPK's tools to see exactly how much you save under new Budget 2026-27 tax rates compared to 2025-26.
Several changes vie for this title. The most dramatic individual move is the slashing of the standard corporate tax from 29% to 20% — a 9-point reduction in one year. For salaried individuals, the complete abolition of the super tax (which was 6% last year, now 0%) combined with slab reductions delivers the largest cumulative relief. The tenfold cut in card transaction WHT (5% to 0.5%) is also historic in reversing a punitive digital payment tax.
Multiple salaried income tax brackets have been reduced: the 22–32 lac bracket drops from 23% to 20%; 32–41 lac from 30% to 25%; 41–56 lac from 35% to 29%; 56–70 lac from 35% to 32%. These are reductions of 3–6 percentage points per bracket. Lower brackets (below PKR 22 lac) remain unchanged. Use our Income Tax Calculator to compare your liability under both years.
In 2025-26, the IT export Final Tax Regime (FTR) at 0.25% was heading toward its expiry on June 30, 2026 — creating deep uncertainty. Budget 2026-27 resolves this by extending the FTR for three additional years until June 30, 2029. For Pakistan's freelancers and IT exporters, this long-term policy certainty could be the most practically valuable change in the entire budget.
The card transaction WHT has been reduced tenfold — from 5% (2025-26) to 0.5% (2026-27). This reverses a policy that was punishing documented digital payments and pushing economic activity toward cash. At 0.5%, digital payments now carry virtually no additional tax friction, creating a genuine incentive for card and online payment adoption.
In 2025-26, banks were required to maintain a 50% ADR and faced a 10% additional corporate tax for failing. Budget 2026-27 relaxes the ADR requirement from 50% to 25% and completely abolishes the penalty tax. This removes a major market distortion that was pushing banks toward government securities and away from private sector lending — with direct implications for the cost of credit in the economy.
🧾 Calculate Your Tax Under New 2026-27 Rates
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