Govt considers withholding tax removal on raw materials

ISLAMABAD: The federal government is likely to announce substantial tax improvements in the upcoming Budget 2025, which includes the withholding tax removal on raw materials to help the industrial and construction sectors, ARY News reported citing sources

Prime Minister Shehbaz Sharif has directed officials to have recommendations from the industry personnel to base relief measures on.

According to the sources, withholding tax removal on raw materials will lessen tax refund volumes and make important supplies more reasonable for businesses.

In addition, the government is thinking of removing withholding tax on property dealings, along with eradicating the federal excise duty on property sales.

A special session with the International Monetary Fund (IMF) is planned to discuss these tax reforms, ensuring alignment with Pakistan’s economic policies.

Keeping Pakistan’s economic policies in consideration, the Government has planned a session with the International Monetary Fund (IMF)

During the session, the government will convince the IMF that the measures are vital as they will

The government aims to convince the IMF that these measures will boost economic activity while securing financial stability.

According to recent reports, Pakistan’s telecom sector is also advocating for withholding tax removal, offering a cut from 15% to 8% to enhance digital adoption.

Furthermore, the government is considering a 2.5% reduction in income tax slabs for salaried individuals, alongside broader tax relief initiatives.

Earlier, the President of Pakistan, Asif Ali Zardari, promulgated the Tax Amendments Ordinance 2025 a few days back, which became effective immediately and introduced significant changes to tax enforcement mechanisms.

Under the ordinance, taxes became immediately payable following a decision by the High Court or the Supreme Court. The Federal Board of Revenue (FBR) was granted the authority to freeze bank accounts without prior notice or proceedings.

Additionally, the FBR can now collaborate with other federal and provincial agencies to seize assets.