Budget 2025-26: Crackdown on Non-Filers as Pakistan Moves to Meet IMF Conditions

ISLAMABAD: The federal government is preparing to implement tough new measures targeting tax non-filers in the upcoming Budget 2025-26, as part of commitments made to the International Monetary Fund (IMF) amid ongoing loan negotiations.

Government insiders revealed that under the new fiscal strategy, individuals who are not tax filers will face a complete ban on purchasing vehicles and property. Non-filers will also be restricted from conducting large financial transactions, as Pakistan works toward eliminating the non-filer category altogether from its taxation framework.

These measures form part of a broader set of reforms aimed at expanding the tax base and increasing revenue collection, a key demand from the IMF as part of its tightening loan requirements. The IMF has expressed concerns over Pakistan’s external vulnerabilities, including global economic shifts and regional tensions, urging swift reforms and timely price adjustments in electricity and gas tariffs.

In addition to targeting non-filers, the government plans to gradually withdraw tax incentives previously offered to special economic zones.

FBR Initiates Tax Reform Measures

According to Federal Board of Revenue (FBR) sources, the government is actively working on overhauling the tax system to improve transparency and efficiency. Key steps include:

• Abolition of the non-filer category to ensure all eligible citizens are brought into the tax net.

• Use of third-party data analytics to identify and pursue tax defaulters.

• Activation of the Compliance Risk Management System in major cities, including Islamabad, Karachi, and Lahore, with plans to extend it to corporate tax units nationwide.

Despite recent setbacks, such as the underperformance of the Tajir Dost Scheme intended to register retailers, FBR officials noted a 51% rise in tax filers among traders and wholesalers following increased withholding taxes on unregistered shopkeepers.

IMF Demands Swift Implementation

During the recent budget discussions with the IMF, both sides agreed on the urgent need to broaden the tax net and enforce stricter compliance. The IMF is reportedly closely monitoring Pakistan’s progress on fiscal reforms as part of its ongoing loan program, which is crucial for maintaining economic stability amid rising inflation and external debt pressures.

Read more: IMF pushes for Punjab’s e-Abiyana water pricing system

The upcoming budget is expected to reflect these reform priorities, signaling a clear shift towards a more robust and enforceable taxation regime in Pakistan.