The government is awaiting approval from the International Monetary Fund for a set of proposed tax relief measures that could ease pressure on salaried workers and businesses, even as it prepares tougher revenue steps ahead of the 2026-27 budget.
The plan under discussion includes lower income tax slabs for salaried individuals, a possible reduction of up to five percent for middle-income earners, and a cut of two percent in the Super Tax on higher-income companies and individuals. Officials are also considering removing the one percent advance income tax on exporters, alongside incentives aimed at reviving the struggling property sector.
However, these relief measures are tied to negotiations with the IMF, which is also pushing for broader revenue mobilisation. One of the key proposals is to raise the General Sales Tax to the standard rate of 18 percent on solar panels, hybrid vehicles and nearly two dozen other items currently enjoying lower rates.
The government has, meanwhile, requested the IMF to maintain concessional GST rates for electric vehicles, arguing that the move supports energy savings and aligns with commitments under the $1.4 billion Resilience and Sustainability Facility programme.
According to officials, Pakistan faces a difficult fiscal balancing act. The Federal Board of Revenue is expected to collect around Rs13,000 billion in the current fiscal year, short of revised targets. Yet the next budget sets an ambitious goal of Rs15,264 billion, leaving a gap of more than Rs2,200 billion that will need to be filled through new measures.
Tax authorities say this shortfall is making negotiations with the IMF increasingly complex as both sides weigh relief for taxpayers against the need for higher collections.
The proposed reforms also include raising the taxable income ceiling for the top 35 percent rate, offering some breathing room for salaried groups. On property, the government is seeking to reduce transaction taxes to zero for filers, though the IMF is expected to insist on at least a minimal rate for documentation purposes.
At the same time, dozens of goods currently taxed at reduced GST rates could be shifted to the standard 18 percent slab. These include items ranging from food products and fertiliser inputs to electronics and machinery.
If approved, the changes are likely to have a direct impact on household budgets, business costs and investment decisions across the country, particularly for middle-income families already facing rising inflation pressures.
