Budget 2025-26: 18% tax imposed on vehicles and solar panels

The federal budget for 2025-26 has been presented in the National Assembly under the leadership of Speaker Ayaz Sadiq by Federal Finance Minister Muhammad Aurangzeb. Here are the significant decisions announced:

Increased Taxes on Small Cars and Solar Panels

Small Cars: The sales tax rate on small cars is being increased from 12.5% to 18%. This will likely make these vehicles more expensive.

Solar Panels: An 18% sales tax is being imposed on the import of solar panels. According to Finance Minister Muhammad Aurangzeb, this decision aims to promote the local solar panel industry within the country.

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Tax Relief for Salaried Class

In a move to provide relief, the budget includes decisions to reduce tax rates for the salaried class:

Annual Income of PKR 6 lakh to 12 lakh: The tax rate will be reduced from 5% to 1%. For an income of PKR 12 lakh, the tax amount is proposed to be reduced from PKR 30,000 to PKR 6,000.

Annual Income up to PKR 22 lakh: The tax rate has been reduced from 15% to 11%.

Annual Income from PKR 22 lakh to 32 lakh: The tax rate has been reduced from 25% to 23%.