Senate Committee Supports Proposed Tax on Social Media Earnings in Budget 2026-27
A parliamentary committee has endorsed a proposal to introduce a 5 percent tax on income earned through social media platforms by both local and foreign digital content creators operating in Pakistan.
The recommendation was reviewed during a meeting of the Senate Standing Committee on Finance as part of discussions on the Finance Bill 2026. Officials said the measure reflects the growing role of digital platforms as a source of income for content creators, influencers, freelancers, and online entrepreneurs.
Under the proposed framework, annual social media earnings of up to Rs600,000 would remain exempt from taxation. Income between Rs600,000 and Rs1.2 million would be subject to a 5 percent tax rate.
Finance Minister Muhammad Aurangzeb and Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial briefed lawmakers on the proposed measures. Officials stated that income generated through digital platforms would be treated in line with other taxable income categories.
During the discussion, some committee members highlighted the importance of maintaining incentives for individuals earning income through international digital platforms. Others emphasized the need to broaden the country’s tax base and ensure fair taxation across different sectors.
The committee also reviewed several other proposals included in the Finance Bill 2026.
Government Signals Gradual Reduction in Super Tax
Finance Minister Muhammad Aurangzeb reiterated the government’s intention to gradually reduce the super tax over time. Officials said the long-term objective is to phase out the levy through a step-by-step approach.
Minister of State for Finance Bilal Azhar Kayani informed lawmakers that several super tax slabs had already been removed, while certain sectors with higher income levels would continue to remain subject to the levy under the proposed framework.
Retail Taxation and Documentation Efforts
Lawmakers also discussed plans to expand tax registration among retailers. Officials noted that only a portion of businesses currently fall within the documented tax system despite the large number of commercial establishments operating nationwide.
According to the FBR, the initial phase of the proposed scheme aims to bring approximately 100,000 larger retailers into the tax net as part of broader documentation efforts.
Exporters and Other Tax Measures
The committee reviewed a proposal to reduce the advance tax rate for exporters from 2 percent to 1.25 percent. Officials said the measure is intended to support export-oriented businesses while maintaining tax compliance requirements.
Members were also informed that the addition of several products to Schedule III of the Sales Tax Act would mainly focus on transparent price and tax display requirements rather than increasing tax rates.
Insurance and Inheritance Provisions
Lawmakers approved a proposal under which only the profit portion of life insurance policies would be taxable from Tax Year 2026, while the principal amount would remain exempt.
The committee also supported the continuation of tax exemptions on property transfers resulting from inheritance following the death of parents, ensuring that inheritance-related transfers remain outside the scope of sales tax.
The Finance Ministry and FBR have been asked to provide further estimates on revenue generation and the overall economic impact of the proposed measures before the Finance Bill 2026 moves forward for additional review.
