The interim government has revised its corporate tax proposal for publicly listed companies following criticism from business leaders.

The finance ministry announced in the budget for FY2025-26 that companies that floated 10 percent or less of their paid-up capital via IPOs will now be taxed at 25 percent—down from the initially proposed 27.5 percent—if all income is routed through banking channels.

The original proposal, presented on 2 June without parliamentary oversight, aimed to impose a uniform 27.5 percent tax rate on such companies, effectively removing the preferential treatment they previously enjoyed.

Until now, these firms were taxed at 25 percent, with an extra 2.5 percent rebate offered for conducting all transactions through banks.

Under the revised terms, companies need only channel income—not all transactions—through banks to qualify for the lower rate. Otherwise, the higher 27.5 percent tax will apply.

Business groups had warned the proposed hike would discourage stock exchange listings and narrow the distinction between listed and unlisted firms.

“We have addressed the concerns appropriately,” National Board of Revenue Chairman Md Abdur Rahman Khan said after the Advisory Council approved the adjustments on Sunday. “Even firms listing less than 10 percent of their capital will now qualify for the benefit.”

The approved budget maintains a 22.5 percent rate for firms that floated more than 10 percent of their capital, reducible to 20 percent if income is bank-routed.

Additionally, tax rates for private universities and specialised educational institutions have been cut from 15 percent to 10 percent.