Islamabad: The federal government is continuing discussions with the International Monetary Fund (IMF) ove-r a package of tax relief measures and revenue proposals ahead of the announcement of the Federal Budget 2026-27, as authorities seek to balance economic growth objectives with ambitious revenue collection targets.
According to media reports, the Federal Board of Revenue (FBR) has proposed a tax collection target of Rs15.264 trillion for the next fiscal year. The proposed target follows a downward revision of the current year’s collection goal to Rs13.428 trillion. Achieving the new target would require the FBR to generate an additional Rs1.836 trillion in tax revenues during FY2026-27.
However, officials believe actual tax collection for the outgoing fiscal year may remain closer to Rs13 trillion, potentially increasing the revenue gap that needs to be bridged in the coming year.
Among the measures under discussion is a reduction in income tax rates for salaried individuals, particularly those falling within middle-income brackets. The extent of any relief is expected to depend on the fiscal space available and the outcome of ongoing negotiations with the IMF.
The government has also proposed adjustments to taxation for higher-income earners and corporations. These include raising the taxable income threshold for the highest 35% tax bracket and reducing the Super Tax rate from 10% to 8% for selected companies and individuals.
The property sector is another area where tax relief is being considered. Authorities have proposed lowering taxes on property purchases and sales for tax filers to encourage market activity and improve documentation. While the government has reportedly sought a complete removal of certain transaction taxes, the IMF is said to favour retaining a minimum levy ranging from 0.5% to 1% to support documentation efforts and maintain revenue streams.
In addition, Pakistan has requested permission to continue offering concessional General Sales Tax (GST) rates on electric vehicles. Officials argue that the incentive supports energy conservation goals and aligns with commitments made under the country’s Resilience and Sustainability Facility programme.
At the same time, the IMF has reportedly urged Pakistan to broaden the standard 18% GST regime by withdrawing reduced tax rates currently available to a number of sectors and products.
Items presently benefiting from concessional GST rates include solar panels, electric and hybrid vehicles, fertiliser inputs, natural gas supplied to fertiliser plants, imported computers and laptops, pharmaceuticals, tractors, animal feed, selected food products, stationery items and industrial imports into former tribal areas.
Government officials are seeking to retain reduced tax rates on some of these products, citing concerns about inflation, industrial competitiveness and consumer affordability.
The discussions come at a crucial stage as Pakistan prepares its fiscal plan for the upcoming financial year. Negotiations remain focused on finding a balance between revenue mobilisation requirements and measures aimed at supporting economic activity, investment and consumer spending.
The final shape of any tax relief package, sector-specific incentives or GST adjustments is expected to become clearer once discussions between the government and the IMF are concluded and the federal budget is formally presented.
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