Sindh Tax Relief: Pakistan Economic Boost
Sindh Budget 2025: No New Taxes, Focus on Development Despite Funding Issues
Karachi—The Sindh government’s budget for 2025-26 avoids new taxes while aiming for increased development spending, Chief Minister Syed Murad Ali Shah announced Saturday. Speaking at a press conference, Shah detailed tax reductions and exemptions, particularly for export processing and special economic zones, which are now exempt from services tax.The provincial government aims to play a key role in boosting the economy.
Entertainment tax has been abolished, and resturant taxes reduced, Shah said. Stamp duty on third-party vehicle insurance drops to Rs50, and insurance tax decreases from 15% to 5%, according to the Sindh Finance Bill 2025-26. A list of tax-exempted items will be published to meet IMF requirements.
The finance bill also exempts services of parliament and assembly members, local government representatives, judges, and tribunal members from sales tax.Construction of houses up to 10,000 square feet in private residential schemes is tax-exempt, as is health and life insurance up to Rs500,000. Government-approved universities and colleges will not pay tax on educational research, and haj and Umrah travel operators are also exempt.
However, a 19.5% tax will apply to vehicle trackers, security cameras, and alarm systems within security services. Internet, telephone, Wi-Fi, and broadband connections will also face a 19.5% tax. Vehicle transactions will incur a 3% tax.
Online payments for restaurants, hotels, farmhouses, and beverages will be taxed at 8%. Cab services will pay 5%, while rental car services and freight vehicles will be taxed at 8%. Hiring armed and security guards will also incur an 8% tax. Real estate services face an 8% tax, and foreign exchange services a 3% tax.
Coaching and training centers will pay 3% tax, as will schools and colleges with annual fees exceeding Rs500,000. The chief minister outlined the province’s fiscal and development agenda, acknowledging financial challenges and federal funding shortfalls.
Chief Minister opposes Center’s 18% general sales tax on solar panels.
Shah criticized the federal government for withholding funds. Sindh was informed just before the budget presentation that Rs105 billion in expected funds would be withheld. “Sindh has received Rs1,478.5 billion from the divisible pool since last year, but Rs422.3 billion remains outstanding,” he said,expressing hope for disbursement by the end of June. The province is taking on a important role in pushing back against federal policies.
The Sindh government will allocate Rs590 billion for development projects this year, within a total budget of Rs3.45 trillion—Rs1 trillion for development and Rs2.15 trillion for current expenditures. Rs1.1 trillion is earmarked for salaries and pensions, leading to salary increases of 12% for lower-grade employees and 10% for higher grades.
Sectoral budget increases include an 18% rise in education funding and an 11% increase in health. Agriculture, irrigation, and local government projects also see significant boosts. the province is actively playing a role in improving key sectors.
Shah noted 20,000 to 25,000 job vacancies in Grades 1 to 4, with recruitment planned via IBA-administered tests for Grades BPS-5 to 7 and filling higher Grade 16 positions.
He expressed concern over the halving of federal funding for the Sukkur-Hyderabad Motorway, from Rs30 billion to Rs15 billion.
Shah emphasized that major projects are excluded from the federal Public Sector Development program (PSDP) and criticized the 18% tax on solar panels as unjust.He warned that the Pakistan Peoples Party would not support the federal