ISLAMABAD: The Finance Bill 2026 is likely to introduce tax policy and enforcement measures worth nearly Rs. 1 trillion in Budget 2026-27, including the imposition of a federal excise duty (FED) on naphtha petroleum products, a fixed sales tax regime for the steel sector, and strict penalties for non compliant taxpayers refusing digital integration, production monitoring, and the installation of point of sale (POS) systems.
Sources said that nearly half of the projected revenue will come from enforcement measures. At the same time, the remaining amount will be generated through policy measures, taking the total revenue impact close to Rs. 1 trillion.
The imposition of FED on naphtha petroleum products is one of the major revenue-generating measures being considered for fiscal year 2026-27. Finance Bill 2026 will amend Inland Revenue laws to make the Federal Board of Revenue (FBR) a fully faceless entity from July 1, 2026. This will require digital integration of taxpayers with FBR systems, particularly in the area of production monitoring.
The bill is expected to impose extraordinary penalties on taxpayers who fail to comply with digital integration and production monitoring requirements from July 1, 2026.
The faceless Inland Revenue system of the FBR is expected to be launched from October 1, 2026, requiring the immediate implementation of production monitoring at manufacturing facilities in key sectors. Sources said the implementation of POS systems and digital integration will be carried out at all costs.
The faceless FBR remains a top priority of the present government. The Faceless FBR Center Inland Revenue is expected to become operational in October 2026. Sources said the faceless system cannot function without digital integration, which is why stringent penalties are being proposed for non-compliant taxpayers under Finance Bill 2026.
Among the proposals under consideration are the imposition of an 18 percent sales tax on solar panels, the inclusion of new items for sales tax collection on a printed retail price basis, and amendments to the Sales Tax Act to strengthen enforcement against sellers of illicit products, including cigarettes.
However, these proposals remain subject to approval by the federal cabinet.
According to the sources, the Prime Minister recently chaired a meeting aimed at improving coordination between the federal and provincial governments to curb illicit trade across the country.
The primary focus of Budget 2026-27 is to strengthen enforcement against non-compliant sectors and taxpayers. Sources said that sales tax and income tax exemptions expiring on June 30, 2026, are unlikely to be extended in the upcoming budget.
According to sources, the federal government may make it mandatory from July 1, 2026, for manufacturers to print retail prices and the applicable 18 percent sales tax on the packaging of a wide range of consumer goods and household appliances, including refrigerators, air conditioners, and washing machines. Most fast-moving consumer goods are expected to be included in the Third Schedule of the Sales Tax Act.
The government has also decided to introduce stricter measures in the next fiscal year to broaden the tax base and reduce sales tax evasion. As part of this initiative, around 20 major categories of commonly used products are proposed to be shifted to the Third Schedule of the Sales Tax Act. The move is expected to generate an additional Rs. 60 billion in sales tax revenue.
Although these products are already subject to the standard sales tax rate, their exclusion from the Third Schedule has allowed retailers to underreport sales and evade taxes.
Following their inclusion in the Third Schedule from July 1, the 18 percent sales tax on these products will effectively be fixed at the manufacturing stage. Companies will also be required to print the retail price and the amount of sales tax on product packaging.
Sources said product packaging across 20 categories is expected to be revised. These categories include packaged milk, yogurt, cheese, milk cream, tea whitener, milk powder, fat-filled milk products, infant formula, cereals, baby foods, and food supplements.
