Islamabad: The federal government is awaiting approval from the International Monetary Fund (IMF) on a series of proposed tax measures and relief initiatives before finalizing the Budget 2026-27. Discussions between Pakistani authorities and the IMF are continuing as both sides seek agreement on revenue targets and taxation policies for the upcoming fiscal year.
According to official sources, the government has proposed several relief measures aimed at supporting businesses and salaried individuals. These include reducing income tax slabs for salaried taxpayers, lowering the super tax by two percentage points, abolishing the one percent advance income tax imposed on exporters, and providing significant incentives for the property sector.
At the same time, negotiations are underway regarding an increase in the General Sales Tax (GST) on solar panels, hybrid vehicles, and nearly two dozen other products. The proposal under consideration would bring the GST rate on these items up to the standard 18 percent rate as part of broader revenue-generation efforts.
Pakistan has also requested the IMF to allow a lower GST rate on electric vehicles. Government officials argue that maintaining reduced taxation on environmentally friendly transportation can help promote energy conservation and support climate-related objectives.
The request is linked to commitments under the IMF’s $1.4 billion Resilience and Sustainability Facility (RSF), which focuses on strengthening climate resilience, sustainable development, and energy efficiency measures in participating countries.
Senior government sources revealed that achieving next year’s tax collection targets remains a major challenge. After revising the Federal Board of Revenue’s (FBR) tax collection target for the current fiscal year ending June 30, 2026, to Rs13.428 trillion, authorities are now working with the IMF to establish a significantly higher target for fiscal year 2026-27.
Current discussions suggest that the proposed tax revenue target for the upcoming fiscal year could reach Rs15.264 trillion. However, officials acknowledge that bridging the gap between current collections and future expectations will require a careful balance of tax reforms, economic growth measures, and IMF-backed fiscal policies.
