General Sales Tax Rate Expected to Increase by 1% in New Budget Due to IMF Demand
The government plans to raise the General Sales Tax (GST) rate by 1 percent in the 2024-25 budget to meet the International Monetary Fund’s (IMF) requirements.
If approved, this increase would generate Rs.180 billion in tax revenue. There is also a proposal to standardize the GST rate across all sectors, according to TheNews.
The IMF has also suggested raising the Personal Income Tax (PIT) rate to 40 percent, but the plan to tax pensioners receiving over Rs.100,000 has been shelved for now.
The IMF shared its draft report with Pakistani officials, recommending strict budget measures, including increasing the GST rate and taxes on higher-income earners.
The IMF also wants provinces to match agricultural income tax with federal rates and eliminate special tax regimes for small and medium enterprises (SMEs) and the construction sector.
So far, the IMF has proposed raising the standard GST rate from 18 percent to 19 percent, reducing the PIT brackets for salaried individuals from seven to four, with a 40 percent tax rate for incomes above Rs. 6 million, eliminating zero-rating except for exports, limiting exemptions to residential property, removing reduced rates, taxing most goods at the standard rate with only essentials at 10 percent, and repealing discretionary tax incentives.
