Finance Act 2026: the changes that actually affect you
Budget coverage in June and the law that applies from July are different documents. The Finance Act 2026 was passed on 23 June 2026 and takes effect for Tax Year 2027 — 1 July 2026 to 30 June 2027. This is a change-by-change register of what it did, what each change is worth in rupees, and what you have to do differently.
At a glance: the enacted changes
| Area | Was | Now (TY2027) | Direction |
|---|---|---|---|
| Salary slabs (four bands) | 23% / 30% / 35% | 20% / 25% / 29% + new 32% band | Relief |
| Salaried surcharge over Rs 10m | 9% | Abolished | Relief |
| Super tax, income over Rs 500m | 10% | 8% | Relief |
| Super tax, Rs 150m – Rs 500m | 1% to 7.5% | Nil | Relief |
| Property purchase, s.236K | 3% | 1.25% | Relief |
| Property sale, s.236C | 3% | 2.75% | Relief |
| Foreign card payments, s.236Y | 5% | 0.5% | Relief |
| Export proceeds, s.154 | 1% final + 1% advance | 1.25% minimum tax | Simplification |
| PSEB IT export concession, s.154A | 0.25% to 2026 | 0.25% to 30 June 2029 | Extension |
| Debt securities disposal, s.151A | 15% | 20% | Increase |
| Deemed income on property, s.7E | In force | Omitted | Repeal |
| Insurance pay-outs | — | New s.7G charge | New charge |
| Social media income | — | 5% filer / 10% non-filer | New charge |
| Late-filer ATL category | Enhanced rates | Withdrawn | Simplification |
| Minimum tax, distributors | 0.25% concession | Standard 1.25% | Increase |
Salaried individuals: four rates cut, one band added, surcharge gone
Four slabs were reduced and the band structure was re-cut, so a mid-career salary is affected in two ways at once.
| Annual taxable salary | TY2026 rate | TY2027 rate |
|---|---|---|
| Up to Rs 600,000 | Nil | Nil |
| Rs 600,001 – 1,200,000 | 1% | 1% (unchanged) |
| Rs 1,200,001 – 2,200,000 | 11% | 11% (unchanged) |
| Rs 2,200,001 – 3,200,000 | 23% | 20% |
| Rs 3,200,001 – 4,100,000 | 30% | 25% |
| Rs 4,100,001 – 5,600,000 | 35% | 29% |
| Rs 5,600,001 – 7,000,000 | 35% | 32% (new band) |
| Above Rs 7,000,000 | 35% | 35% |
Separately, the 9% surcharge on salaried taxable income above Rs 10 million is abolished. That is the change with the largest effect at the top: the surcharge-adjusted top marginal impact falls from 38.15% to 35%.
What it is worth at three salary levels
| Annual salary | TY2026 tax | TY2027 tax | Saving |
|---|---|---|---|
| Rs 3,000,000 | Rs 300,000 | Rs 276,000 | Rs 24,000 |
| Rs 4,000,000 | Rs 573,000 | Rs 516,000 | Rs 57,000 |
| Rs 6,000,000 | Rs 1,242,500 | Rs 1,104,000 | Rs 138,500 |
Take the Rs 3,000,000 case in full. It lands in the fourth band: Rs 116,000 base plus 20% of the Rs 800,000 above Rs 2,200,000 = Rs 160,000, total Rs 276,000. That is an effective rate of 9.2%, not the 20% headline — the marginal rate applies only to the slice above the band floor. Anyone quoting "20% tax" on this salary overstates the liability by roughly Rs 324,000.
Payroll action: the new slabs apply from the first payroll of July 2026. Annualise projected full-year salary, compute on the TY2027 table, deduct tax already withheld year to date, and spread the balance over the remaining months. See section 149 withholding and the full slab guide.
You draw a salary, tax is deducted at source every month, and you want the return filed properly without spending a weekend inside IRIS.
Super tax: abolished below Rs 500 million, cut to 8% above
Super tax sits in section 4C, with rates in Division IIB, Part I of the First Schedule. The Act did two things: it removed the six intermediate slabs and cut the top rate.
| Income | TY2026 | TY2027 |
|---|---|---|
| Up to Rs 150 million | Nil | Nil |
| Rs 150m – Rs 500m | 1% rising to 7.5% | Nil |
| Over Rs 500 million | 10% | 8% |
| Banks, E&P, fertilizer — over Rs 150m | Previous structure | Previous structure retained |
The excluded sectors matter: banking companies, oil and gas exploration companies, and persons selling fertilizers do not get the relief where income exceeds Rs 150 million.
Note the shape. A company at Rs 400 million saves its entire 7.5% charge — Rs 30,000,000. A company at Rs 900 million saves two points, Rs 18,000,000. And because the charge applies to the whole income rather than the excess, Rs 500 million is a cliff, not a slab boundary: Rs 495m of income bears nil, Rs 505m bears 8% on all Rs 505m — roughly Rs 40 million of tax turning on Rs 10 million of income. Year-end income measurement is worth real money here. See super tax in detail.
Property: both sides of the transaction cut
| Section | Who pays | Base | TY2026 | TY2027 |
|---|---|---|---|---|
| 236K | Buyer | Fair market value | 3% | 1.25% |
| 236C | Seller | Consideration received | 3% | 2.75% |
On a Rs 30,000,000 transaction between active taxpayers, the buyer's advance tax falls from Rs 900,000 to Rs 375,000 — Rs 525,000 less at the counter — and the seller's from Rs 900,000 to Rs 825,000. Combined, roughly Rs 600,000 less withheld on a single deal.
Two cautions. First, these are advance-tax collections, not the tax on the gain: the capital-gain position is computed separately from acquisition date, cost and holding period. Second, non-filer rates remain substantially higher, so the filer premium on property is now a larger multiple of the filer rate than before. See section 236K and section 236C.
Separately, section 7E — deemed income on capital assets — was omitted. That removes a charge that had generated persistent dispute and a certificate requirement on transfer.
Exporters and the IT sector
| Item | TY2026 | TY2027 | Character |
|---|---|---|---|
| Export proceeds, s.154 | 1% final + 1% advance | 1.25% | Minimum tax |
| Inland back-to-back LC | 1% | 1.25% | Minimum tax |
| EPZ units | 1% | 1.25% | Minimum tax |
| Indirect exporters (DTRE / EFS) | 1% | 1.25% | Minimum tax |
| PSEB-registered IT / ITeS, s.154A | 0.25% | 0.25% to 30 June 2029 | Final tax |
The export change is a simplification with a sting. The old two-rate structure — 1% final plus 1% advance — collapses into a single 1.25% minimum tax. Minimum tax means you compute normal taxable income and pay the higher of the two, so a profitable exporter can owe more than the withholding, while a loss-making exporter still bears the 1.25%.
On Rs 100,000,000 of realised proceeds that is Rs 1,250,000 withheld. An exporter whose normal computation produces Rs 3,000,000 of tax pays Rs 3,000,000, not Rs 1,250,000. Model both figures before assuming the withholding is the end of it.
For IT exporters, the headline is the extension of the 0.25% concession to 30 June 2029 — three more years of planning certainty, conditional on PSEB registration remaining current. See the IT export rate and PSEB registration.
Active Taxpayer List: the late-filer category is gone
The Act withdrew the enhanced withholding rates that applied to ATL persons who filed after the due date, removing the categorisation based on filing timeliness. The system is back to a binary: on the ATL, or not.
This is a simplification, but it does not make late filing cheap. Restoration surcharges and the late-filing penalty regime still apply, and the non-filer multiplier under the 10th Schedule — broadly double the standard rate — still bites on almost every transaction. See ATL inclusion after late filing and filer versus non-filer rates.
Two new charges, and one withdrawn concession
- Section 7G — insurance and takaful pay-outs. A new charge on individuals receiving such amounts. The taxable amount is the gross pay-out or benefit less the aggregate premiums or contributions the policyholder paid, so the base is the net gain rather than the receipt. Anyone maturing a long-held policy in TY2027 should compute this before treating the proceeds as tax-free.
- Social media income. A new withholding tax of 5% for filers and 10% for non-filers on income from social media platforms. See creator income.
- Minimum tax concession withdrawn. The reduced 0.25% minimum tax rate under section 113 for distributors of pharmaceutical products, FMCGs and cigarettes is gone; those distributors move to the standard 1.25%. On Rs 500,000,000 of turnover that is a move from Rs 1,250,000 to Rs 6,250,000 — a fivefold increase, and the single largest adverse change in the Act for a high-turnover, thin-margin distributor. See minimum tax on turnover.
Withholding agents: what to change in your systems
| System / process | Change required |
|---|---|
| Payroll (s.149) | Load TY2027 slabs; remove the 9% surcharge logic |
| Property desk (236C / 236K) | 2.75% seller, 1.25% buyer for actives |
| Card and FX payments (236Y) | 0.5%, down from 5% |
| Treasury (151A) | 20% on debt-securities disposal gains, up from 15% |
| Export desk (154) | 1.25% as minimum tax; retire the dual-rate logic |
| Vendor onboarding | Retire the late-filer category; keep the ATL check |
| New categories | Add social media WHT and the s.7G charge |
Two dates govern compliance and neither changed: withholding statements are filed through IRIS by the 15th of the following month, and tax deducted is deposited by the same date. Failure to deposit tax actually deducted is an offence that can reach company officers personally, which is why the deposit date matters more than the statement date.
The change most finance teams will feel first
The advance tax on payments made using foreign credit and debit cards under section 236Y fell from 5% to 0.5% — a nine-tenths reduction. For any business paying for SaaS, cloud hosting, advertising platforms or international subscriptions, this is an immediate and visible cost reduction.
On Rs 6,000,000 of annual foreign card spend, the advance tax falls from Rs 300,000 to Rs 30,000. It remains an adjustable advance tax, so it is claimable in the return — but the cash-flow drag through the year effectively disappears. See foreign card payments.
What to actually do with this
- Re-run payroll on the TY2027 table from the July 2026 period, and reverse any surcharge logic still in the system.
- Re-forecast the group tax charge if income sits anywhere near Rs 500 million — the cliff makes the estimate materially sensitive.
- Re-model exporter position on a minimum-tax basis, comparing 1.25% of proceeds against the normal computation.
- Reprice distributor margins if you are in pharma, FMCG or cigarettes; the minimum tax moved fivefold.
- Confirm PSEB registration is current before relying on the 0.25% rate to 2029.
- Work from the enacted Act, not June budget coverage — several widely reported proposals changed between Bill and Act.
Related: the TY2027 withholding rate card and return deadlines.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
- Finance Act 2026 (FBR)
- Federal Budget 2026-27 salient features (FBR)
- Finance Acts archive (FBR)
- Tax Year 2027 withholding rate summary (KPMG Pakistan)
Questions people also ask
Does the Finance Act apply from the date it was passed or from 1 July?
Most income tax measures in a Finance Act apply from the start of the tax year, which is 1 July. Some procedural provisions apply from the date of enactment or from a date specified in the Act itself. That distinction matters when a transaction sits close to the boundary, so check the effective date of the specific clause rather than assuming a single start date for the whole Act.
Can I rely on the budget speech or the salient features document?
Only as a signal of intent. Proposals change between the Bill and the Act, and the salient features summary is a communication tool, not the law. If you built a planning note from budget-day coverage in June 2026, re-check every figure in it against the enacted text before acting on it.
Which change affects the most taxpayers?
The Active Taxpayer List restoration surcharge under section 182A. It applies to anyone who files late, regardless of income level or business type, and the increase was substantial. For property buyers and sellers, the reduced sections 236C and 236K rates for active taxpayers are the largest rupee change.
Were the salary slabs changed for Tax Year 2027?
The Tax Year 2027 salary slab table runs across eight progressive bands, from nil up to Rs 600,000 through to Rs 1,424,000 plus 35% above Rs 7,000,000. Salary remains outside the section 4AB surcharge for Tax Year 2027, which business individuals and associations of persons are not.
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