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Finance Act 2026 · in force from 1 July 2026
What this year's budget means for you.
The federal Finance Act 2026 and the provincial Finance Acts 2026 changed rates, penalties and how FBR handles audits. These are the changes most likely to affect you.
i.
Salaried people pay less
- Rates cut on every slab above Rs 2.2m a year: 20%, 25%, 29% and 32%, against 23–35% last year.
- The 9% surcharge on salaries over Rs 10m no longer applies to salaried income.
- At Rs 4.1m a year, that is Rs 75,000 less tax.
ii.
Filing late costs more
- Surcharge to rejoin the Active Taxpayers List after a late return: Rs 25,000 for individuals, Rs 50,000 for AOPs, Rs 100,000 for companies.
- Individuals can avoid it by undertaking not to buy property for six months.
- Non-filers keep paying most withholding at double the filer rate.
iii.
Property is simpler
- One advance-tax rate for filers: 2.75% on sale and 1.25% on purchase, whatever the value.
- The higher "late filer" property rates are abolished.
- Tax on deemed rental income from property has been removed, and the cost of inherited property is now defined.
iv.
Businesses and withholding
- Withholding on general services down to 14%; specified services up to 7%; exports of goods up to 1.25%.
- Companies must file financial statements in machine-readable formats (XLSX, XML), not PDFs or scans.
- Social media revenue now has 5% withholding; card payments abroad drop from 5% to 0.5%.
v.
Notices and audits go faceless
- A new National Faceless Centre can run audits, assessments and appeals, with online hearings.
- An algorithmic settlement mechanism can offer to settle disputes; an independent committee reviews cases before audit.
- Penalties for ignoring record notices rise to Rs 100,000–300,000.
vi.
Provincial sales tax on services
- Sindh: accounting, bookkeeping and repair services move from 8% to the 15% standard rate, and most construction loses the 8% option.
- Sindh appeals: auto-stay of recovery now needs 20% of the tax paid (was 10%).
- Punjab: input tax adjustment capped at 80% (was 90%); missing two returns in a row removes active status.
Read more
The changes, explained.
26Finance Act 2026
Budget 2026: what changes for salaried people
Lower rates on middle and higher salaries, no more surcharge, and what it means for your payslip.
Read article →5FBR noticesReceived an FBR notice? Do these five things first
A calm, practical checklist, now that audits and hearings are moving online.
Read article →2×Filer statusFiler vs non-filer: what not being on the ATL really costs
Higher withholding everywhere, from bank profit to property. The numbers for tax year 2027.
Read article →Book a free consultation
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