Pakistan has announced plans to implement additional tax measures totaling Rs. 200 billion starting January, contingent on revenue shortfalls or higher-than-expected government spending in the first half of the fiscal year. The move is part of ongoing commitments under the $7 billion IMF bailout programme, aimed at keeping the country on track with agreed fiscal targets.
According to a report by Express Tribune, proposed measures include increases in income tax rates on both landline and mobile calls, higher withholding tax on cash withdrawals from banks, and elevated duties on solar panels. These measures will only be triggered if Federal Board of Revenue (FBR) fails to meet its end-December revenue target or if government expenses exceed IMF-agreed limits. Additional steps under review include expanding federal excise duty to cover items such as confectioneries and biscuits, along with potential adjustments to the standard sales tax rate.
The FBR has faced challenges in meeting targets, with a Rs. 198 billion shortfall reported in the first three months of the fiscal year. As of October 29, tax collection stood at Rs. 3.65 trillion, leaving the authority needing Rs. 460 billion more in less than two months to meet the four-month target. Proposed measures include doubling the withholding tax on cash withdrawals for non-filers to 1.5 percent, up from 0.8 percent, which could generate an estimated Rs. 30 billion annually. Similarly, landline tax may rise from 10 to 12.5 percent and mobile call tax from 15 to 17.5 percent, potentially adding Rs. 20 billion and Rs. 24 billion to revenues respectively.
The government is also considering a 16 percent federal excise duty on confectioneries and biscuits, which could bring in Rs. 70 billion annually when combined with sales tax and other levies. In parallel, plans to raise the standard sales tax to 19 percent are being evaluated, potentially generating Rs. 225 billion per year, though current priorities focus on targeted taxes. These measures are framed within broader fiscal strategies, as Sindh and Punjab have deferred increased agriculture income tax collection for one year, while FBR continues efforts to broaden the tax base.
IMF has maintained Pakistan’s annual primary budget surplus target at 1.6 percent of GDP, or Rs. 2.1 trillion, with a review expected following updated flood loss assessments. The World Bank has revised Pakistan’s economic growth forecast to 3 percent after lower-than-expected flood damages. The government expects to recover approximately half of the proposed Rs. 200 billion in additional revenue between January and June 2026, pending final approvals and agreement with IMF fiscal targets.
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