- The 2025-2026 budget will be announced on June 2.
- The IMF is opposed to the reduction of tax rates for the salaried class.
- Annual plan coordination committee to meet on May 26.
Islamabad: Pakistan and the International Monetary Fund (IMF) are considering options to take taxation and application measures in order to recover additional 700 billion in the upcoming budget for 2025-26.
With the announcement of the 2025-2026 budget on June 2 in Parliament, the government asked the IMF to rationalize taxes for the salaried, tobacco and drinks sectors.
The IMF has raised objections on the reduction of tax rates for the salaried class and has inquired about an impact on higher income if the rates are revised downwards for average income employees between 0.2 RS to 0.4 million rupees per month.
The Annual Planning Coordination Committee (APCC) should meet on May 26 to recommend the framework of the framework and macroeconomic development at the National Economic Council (NEC) for the upcoming budget.
For the tobacco sector, it is possible to raise the minimum legal price (MLP) to RS162.25 by package, because more than 80% of brands are sold below the MLP or slightly above the MLP, one of the options is therefore to increase the MLP without modifying the tariffs of two excited and federal levels of federal excise.
The Ministry of Finance and the FBR have presented an annual income collection target of 14,307 billion rupees for the next budget.
However, the IMF and the Pakistani side could not reconcile the figure of the income collection objective due to differences based on nominal growth.
There is a difference in RS300 billion due to differences in nominal growth projections. The government has planned that nominal growth will result in the security of RS13 556 billion, but the IMF insists that the FBR could not recover beyond RS13 200 billion, which increases the differences of more than 300 billion rupees in projections.
In the event of an agreement on the FBR tax objective of 14,307 billion rupees and a basic perception of RS13.556 billion, the government will have to recover 700 billion rupees thanks to a combination of additional tax measures and effective application.
Regarding the application, monitoring the payment of tax in advance to the threshing green sheets (GLT) for unprocessed tobacco could be a potential area of income. The MLP could be taken into account for an increase in the upcoming budget. The tobacco industry is struggling with an important challenge, keeping in view the constant violation of the minimum legal price. This problem is exacerbated by the proliferation of illegal cigarette marks below or slightly above the MLP posing serious health risks and economic repercussions.
In the drinks sector, there are discussions on the reduction of tax rates, but the IMF increased objections on how the FBR would deal with if reimbursements were generated in this sector. The FBR does not want to take measures to create reimbursements in a sector.
Originally published in The news