Pakistan has assured the International Monetary Fund (IMF) that it will implement Rs. 200 billion worth of additional tax measures in January if revenue targets fall short or expenses exceed agreed limits in the first half of the fiscal year.
The commitment is part of efforts to keep the country’s $7 billion IMF bailout programme on track.
According to report by Express Tribune, the proposed measures include higher income tax rates on landline and mobile calls, as well as increased withholding tax on cash withdrawals from banks.
The steps will only be triggered if the Federal Board of Revenue (FBR) misses its end-December target or if government spending rises above agreed thresholds.
Other contingency measures under consideration include raising the sales tax on solar panels from 10% to 18% and expanding the federal excise duty (FED) to cover confectioneries and biscuits.
The government is also weighing an increase in the standard sales tax rate to 19%, which could generate Rs. 225 billion annually, but is currently prioritizing targeted measures on withholding tax, sales tax, and FED.
The FBR is already struggling to meet its targets, with a Rs. 198 billion shortfall in the first three months of the fiscal year. As of October 29, tax collection stood at Rs. 3.65 trillion, leaving the FBR needing Rs. 460 billion more in just 48 hours to meet its four-month goal.
Among the proposed measures, the government may double the withholding tax on cash withdrawals for non-filers to 1.5%, potentially raising an additional Rs. 30 billion annually.
The current rate is 0.8%. The government is also considering increasing the withholding tax on landline phones from 10% to 12.5%, which could generate Rs. 20 billion per year, and raising the tax on cellular calls from 15% to 17.5%, expected to bring in Rs. 24 billion annually.
A further proposal would impose a 16% FED on confectioneries and biscuits, aiming to collect Rs. 70 billion in revenue each year. If implemented, the effective tax rate on processed foods could reach 38% after accounting for sales tax, FED, and other levies.
The government’s contingency plan comes as the provinces of Sindh and Punjab have deferred the collection of agriculture income tax at enhanced rates of up to 45% for one year.
Meanwhile, the FBR’s plans to broaden the tax base remain largely unimplemented, with existing taxpayers likely to bear the brunt of new measures.
The IMF has so far refused to lower Pakistan’s annual primary budget surplus target of 1.6% of GDP, or Rs. 2.1 trillion, but has promised to review the target once final flood loss estimates are available.
The World Bank has already revised its economic growth forecast for Pakistan upward to 3% after flood losses proved less severe than initially feared.
The government expects to recover half of the Rs. 200 billion in additional taxes during January-June 2026, subject to final approvals and the IMF’s agreement on fiscal targets.
