Manufacturing sector's super tax to drop in new industrial policy

ISLAMABAD: The preparation of Pakistan’s new industrial policy has reached its final stages, with measures aimed at bolstering the manufacturing sector, ARY News reported.

According to sources, the policy includes a decision to gradually reduce the super tax rate for the manufacturing sector to 5% over the next four years. In the fifth year, the super tax will be completely phased out, provided the primary balance achieves a surplus.

The new industrial policy is set to be presented for approval to the federal cabinet this month. Among the proposed reforms is an increase in the minimum threshold for imposing the super tax, which is currently set at PKR 200 million.

The policy draft suggests raising this threshold to PKR 500 million. Additionally, for the imposition of a 10% super tax, the threshold is proposed to be increased from PKR 500 million to PKR 1.5 billion.

The policy also outlines measures to revive struggling industrial units and rationalize tax rates for the manufacturing sector. Other key initiatives include the introduction of a bankruptcy framework, easier access to credit for manufacturers, investment protection, and steps to boost exports in the manufacturing sector.

In a separate development, the Federal Board of Revenue (FBR) issued amendments to the income tax regulations for the fiscal year 2025-26, bringing new changes to broaden the tax base and discouraging non-compliance.

According to official documents, if non-filers withdraw more than PKR 50,000 daily from bank accounts, they will now face a 0.8% withholding tax on their transactions, up from the previous 0.6% rate.

The new revised tax rules focus on undocumented cash transactions and encourage individuals to file tax returns.