Budget FY26: Govt cuts tax for internet services

Mobile operator turnover tax has also been cut in the proposed budget for the upcoming financial year

The proposed budget for the financial year 2025-26 has reduced tax at source for internet services to 5 percent from 10 percent.

In his budget presentation on Monday, Finance Advisor Salehuddin also proposed to reduce the tax on mobile operators turnovers to 1.5 percent from 2 percent.

He mentioned that these changes are aimed at removing discrepancies in the tax structure and expanding the tax coverage under the Finance Ordinance 2025.

Although the budget indicates a slight decrease in the cost of using the internet, the cost of using OTT (over-the-top) platforms is likely to increase. Alongside, determining the definition of such services, the proposed budget aims to impose a 10 percent supplementary duty.

As a result, consumers may have to pay more money on popular OTT platforms to watch dramas, movies or web series.