ISLAMABAD: (Web Desk) – In a significant development, the International Monetary Fund has urged Pakistan to impose an 18% General Sales Tax (GST) on petroleum products and solar systems, a move that could lead to further increases in prices for consumers. The proposal has raised concerns about additional financial pressure on households already dealing with inflation.
According to reports, the IMF has also recommended setting the tax collection target for the 2026–27 federal budget at more than Rs15.6 trillion, reflecting an increase of over Rs1.6 trillion compared to current goals. The lender is pushing for broadening the tax base and enhancing revenue generation.
Among its key suggestions, the IMF has called for applying GST on fuel, including petrol, which is currently exempt from such taxation. It has also proposed extending the same 18% tax to solar panel users, a move that could impact the growing shift toward renewable energy. Additionally, the removal of tax exemptions for newly constructed houses has been recommended.
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The proposals further include introducing asset-based taxation for small businesses and traders to improve documentation of the economy. Meanwhile, revenue collection challenges persist, as the target for the current fiscal year was revised down from Rs14.131 trillion to Rs13.979 trillion. Despite this adjustment, a shortfall of Rs428 billion has already been recorded within the first eight months.
Officials have warned that the revenue gap could widen beyond Rs600 billion in the first nine months of the fiscal year. In March alone, collections exceeded Rs865 billion against a target of Rs1.367 trillion. Contributing factors include reduced imports due to regional tensions and a slowdown in business activity driven by high fuel costs.
The Federal Board of Revenue remains optimistic about narrowing the gap through measures such as super tax and additional surcharges. Finance Ministry officials have indicated that further negotiations with the IMF will take place ahead of the upcoming federal budget.
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