Tax-to-GDP Ratio Improvement Saves the Day, IMF Approval
IMF praises Pakistan's tax-to-GDP rise to 10.3%, easing mini-budget concerns. Tax reforms, stable exchange rates, and a revamped trader tax scheme are in the works.
The International Monetary Fund (IMF) has shown satisfaction with Pakistan's improved tax-to-GDP ratio, which has risen by 1.5 percentage points to 10.3% from 8.8%, according to sources in talks with the IMF mission. This increase has reduced the need for additional tax measures or a mini-budget.
The Federal Board of Revenue (FBR) has retained its revenue collection goal of Rs12.97 trillion for the current fiscal year. Economic activity is expected to strengthen by December, supported by a stable exchange rate and a lowered State Bank policy rate, helping to counter the Rs190 billion tax shortfall seen from July to October.
- Petroleum Levy: No increase planned.
- No GST on Petroleum: General Sales Tax will not apply to petroleum products.
- Agricultural Income Tax: Collection to begin in the next fiscal year, per IMF commitments.
- Tax Reforms: The proposed Tax Laws Amendment Ordinance 2024 has been submitted to the Prime Minister, aiming to introduce family income tax returns and eliminate non-filers and late filers categories.
- Tajir Dost Scheme: IMF discussions are ongoing to revise this scheme to better integrate traders into the tax system.
FBR reports Rs12 billion collected from retailers in Q1 of 2024-25, targeting 500,000 out of three million small shopkeepers for tax inclusion.
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