Business Desk 
Jun 11, 2025
The federal government has proposed major tax changes in Budget 2025-26 to increase revenue and bring more sectors into the tax net. A key proposal includes raising the tax on interest income, which is money earned passively on deposits and savings accounts. The rate has gone up from 15% to 20%.
This higher tax will not apply to National Savings Schemes, offering some relief to small savers.
Govt increases tax on interest income
However, for those who earn, by bank interest or other sources of passive income, the increase means less money in their pockets. The government states that this is part of its wider effort to enforce tax collection and reduce reliance on indirect taxation.
In another major development, the budget also implements new tax measures for online trade. E-commerce platforms will now be required to deduct taxes on digital orders and submit monthly data to tax authorities.
In a separate proposal, the budget includes a 25% tax on any income derived from money lending, which expands the taxable base. However, in a bid to instil confidence into the investment community, the government has not changed the tax rate on profits from shares.
Moreover, the budget proposes to tax pensions exceeding Rs10 million per year at 5% per annum, but this measure will only affect people who are below 70 years of age. The intention is to target higher-income people, without taxing low- or middle-income retirees.
