By In a bold move to expand Pakistan’s tax base, the Federal Budget 2025–26 introduces stringent new regulations targeting non-filers and launching an eco-focused “Green Tax” on vehicles. Announced by Finance Minister Muhammad Aurangzeb during his address to the National Assembly, the new measures are part of a broader strategy to formalize the economy and improve tax compliance.
Non-Filers Barred from Vehicle Purchases
One of the most significant and impactful budget proposals is the decision to prohibit non-filers from purchasing vehicles in Pakistan. According to the Finance Minister, individuals who do not file their tax returns and fail to submit wealth statements will no longer be allowed to engage in formal financial transactions, including buying automobiles.
This policy aims to incentivize citizens to register with the Federal Board of Revenue (FBR) and fulfill their tax obligations. If enacted, it would be among the toughest crackdowns on tax evasion in the country’s history. By denying non-filers access to big-ticket purchases, the government seeks to enforce compliance and strengthen economic documentation.
Introduction of the Green Tax on Vehicles
In addition to promoting tax compliance, the budget introduces the Green Tax, a new levy imposed on vehicles with a focus on encouraging environmentally responsible choices and boosting revenue generation. Here’s a breakdown of the new Green Tax structure:
- Vehicles under 1300cc: A 1% levy on the car’s value, applicable to both locally manufactured and imported cars.
- Vehicles between 1300cc and 1800cc: A 2% levy on the vehicle’s value.
- Vehicles over 1800cc: A 3% levy will be imposed, regardless of origin.
- Commercial vehicles (buses and trucks): A uniform 1% levy, applicable to both local and imported models.
Why It Matters?
These changes are likely to have far-reaching effects. For tax-compliant citizens, access to financial services and vehicle purchases remains uninterrupted. However, non-filers will find their purchasing power significantly restricted. The Green Tax also signals the government’s intent to integrate sustainability into fiscal policy, penalizing higher-emission vehicles while generating much-needed revenue.
Final Thoughts
The Federal Budget 2025–26 is not just about numbers—it’s about shifting behavior. By tightening the net on non-filers and introducing eco-based taxation, Pakistan is making a decisive push toward a more accountable and environmentally conscious economy.
