The federal government on Tuesday, in the budget for fiscal year 2025-26, announced that it will extend the tax net to the areas of former federally administered tribal areas (FATA) and provincially administered tribal areas (PATA), in which the Malakand division also falls.
The federal finance minister, Aurangzeb, presented the budget for the fiscal year 2025-26 on Tuesday. He announced that after decades of exemption, the tax net will be extended to PATA and FATA.
The budget document highlighted that the tax exemption in PATA and FATA is causing challenges for the government in collecting taxes from citizens. In this context, the government has decided to impose a 10% sales tax in the merged districts and the Malakand division of Khyber Pakhtunkhwa province.
Additionally, the government has introduced various new types of taxes in an effort to stimulate economic growth. However, residents of the Malakand division and FATA have rejected the government’s plan to impose these taxes.
Read also: Pakistan introduces 18% tax on imported solar panels in budget 2025-26
Pakistan’s federal budget for 2025-26 has introduced an 18% sales tax on imported solar panels while simultaneously slashing duties on raw materials for local manufacturers—a strategy aimed at boosting domestic production but raising concerns about short-term price hikes and slowed adoption.
Finance Minister Muhammad Aurangzeb defended the tax, calling it a necessary step to nurture Pakistan’s solar manufacturing sector and reduce reliance on foreign imports. To offset the impact, the government announced sweeping incentives, including:
Video Explainer of taxes:
