The International Monetary Fund (IMF) has recommended that the government of Pakistan implement an 18% General Sales Tax (GST) on a wide range of vital goods, such as food, medicines, fuel, and school supplies.
IMF’s demands are part of a comprehensive report prepared by IMF specialists for the administration that recently took office in Pakistan, advocating for the abolition of existing sales tax exemptions. Following the IMF team’s visit to Pakistan in December 2023, the IMF team submitted this report to Islamabad in February 2024, aiming to inform the budget planning for the fiscal year 2024-25.
The IMF’s advice includes unifying the GST at an 18% rate for several categories, especially raw foods, educational materials, pharmaceuticals, and energy products. The IMF estimates that this adjustment in GST rates could boost the country’s revenue by about 1.3% of its Gross Domestic Product (GDP), translating to roughly Rs1,300 billion in additional income for the government.
Moreover, the IMF recommends abolishing tax regulations that hinder proper tax compliance and removing minimum taxes, extra taxes, and specific schedules in the tax code to make the system more efficient.
In another development from the previous month, Pakistan declared its plan to discuss a loan agreement with the IMF, aiming to secure an extra $1.5 billion for climate-related financing. These negotiations are expected to increase the program’s total to between $7.5 and $8 billion, incorporating climate finance as an element of the upcoming rescue package.
 has proposed that Pakistan enforce an 18% General Sales Tax (GST) on crucial items like food, medicines, and fuel to boost revenue and streamline tax compliance.){kind=link}