IMF Open to Tax Relief Measures in FY26 Budget

The International Monetary Fund (IMF) has shown willingness to consider tax relief measures in the upcoming budget for the fiscal year 2025-26. Sources from the Ministry of Finance told ProPakistani that another delegation from the International Monetary Fund (IMF) may soon visit Pakistan to discuss the upcoming budget for the fiscal year 2025-26. The delegation is scheduled to visit Pakistan after Eid (April 4, 2025). Taxation measures and curbing unnecessary expenditures will be main items on the agenda this time, sources added. The IMF delegation will consult with Pakistani authorities on the budget for the new fiscal year, which is expected to be presented to parliament in the first week of June. Virtual discussions between Pakistan and the IMF will also continue. The focus of the visit will be to finalize the budget targets for the new fiscal year. Sources said that the IMF delegation will mainly focus on the revenue measures for the next fiscal year despite the fact that the Pakistani side has tried its best to get permission to reduce taxes on key sectors during recently concluded talks. There is a proposal to eliminate the Federal Excise Duty on the first transaction of property. This measure aims to stimulate business activity in the property sector. According to Revenue Division sources, other withholding taxes on property transactions will remain in place. Subsequent property transactions will be subject to the full tax amount. The current tax rates for property sellers will remain unchanged. The IMF has opposed reductions in other taxes related to real estate sector transactions. Pakistan had requested the lender to cut taxes on the construction, tobacco, and beverage sectors. On the other hand, the IMF did not agree with the government plan, especially on tobacco,o as they think that reducing taxes on tobacco can increase the health cost, rejecting the stance of Tobacco companies operating in Pakistan. Pakistan’s health ministry is also asking for increasing taxes on tobacco while the tobacco industry is asking to lower the taxes on tobacco, citing that legitimate industry sales are decreasing in Pakistan.