Pakistan government will raise the General Sales Tax (GST) by 1 percent. This change will come in the 2024-25 budget. The move aims to meet IMF demands. The new GST rate will generate Rs. 180 billion in tax revenue. All sectors will have a standardized GST rate.
The IMF wants a Personal Income Tax (PIT) rate hike. They suggest a 40 percent PIT rate. Pensioners earning over Rs. 100,000 will not face this tax yet.
The IMF’s draft report urges strict budget measures. They push for a higher GST and higher taxes on the wealthy.
The IMF wants provinces to align agricultural income tax with federal rates. They also want to end special tax regimes for SMEs and construction.
The IMF proposes raising the GST rate from 18 to 19 percent. They want to cut PIT slabs for salaried people from seven to four. A 40 percent tax will apply to incomes above Rs. 6 million. Zero-rating (Fifth Schedule) will only apply to exports.
Exemptions (Sixth Schedule) will only cover residential property. Most goods will be taxed at the standard rate. Only essentials will be taxed at 10 percent. Discretionary tax incentives will be repealed.
IMF Proposes 18% GST on Petrol and Food to Raise Rs. 1.3 Trillion: Pakistan
IMF wants 18% GST on petrol and food. This will raise Rs. 1.3 trillion. IMF wants Pakistan to charge GST on more items.
These items include food, medicines, and petrol. The IMF has not checked inflation impact. Higher GST may raise prices.
IMF also wants to end some GST rules. They want to remove the Fifth Schedule. This schedule gives tax breaks. IMF wants fewer tax breaks.
They want exemptions for only key items. These items include food, education, and health supplies.
IMF wants to end lower GST rates. These rates are under the Eighth Schedule. They also want fewer compliance taxes. This includes minimum taxes and surcharges.
IMF suggests removing zero ratings. The Fifth Schedule gives these zero ratings.
These ratings help diplomats and some groups. Ending them may affect diplomats and select groups.
IMF wants to limit Sixth Schedule exemptions. Some items get these exemptions now. These items include imported vegetables and medical devices.
IMF has other recommendations. They want changes to the Eighth Schedule. This schedule covers natural gas, phosphoric acid, and fertilizers. They want adjustments to these items.
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