The government has announced expanded tax relief for pensioners, keeping pension income up to PKR 10 million annually fully exempt from tax under the Budget 2026–27.
According to the proposal, pension income above PKR 10 million per year will be taxed at a flat rate of 5%.
Officials said the measure is designed to protect retirees from inflationary pressures while ensuring a balanced taxation framework for higher pension incomes.
3) Debit Card Transaction Tax – Budget Proposal
Govt Proposes Sharp Cut in Debit Card Tax to Promote Digital Transactions
The government has proposed a major reduction in withholding tax on bank-issued debit card transactions, cutting the rate from 5% to 0.5% — a 90% reduction under the Budget 2026–27 proposals.
Officials said the existing tax structure has encouraged the use of informal and cash-based financial channels, weakening efforts to document the economy.
The revised proposal aims to encourage documented financial activity by setting a lower 0.5% withholding tax on debit card transactions, while discouraging undocumented cash circulation.
Authorities said the move is part of broader efforts to strengthen financial transparency and expand the formal economy.
