Negotiations between the Pakistani government and the International Monetary Fund (IMF) on the upcoming fiscal year’s budget remain inconclusive, with key differences persisting over proposed tax relief measures.
The government is pressing the IMF to reduce the super tax and grant relief to various sectors, including the salaried class and the real estate industry. However, these demands have encountered firm resistance from the IMF, with no formal agreement reached on any concessions so far.
According to insiders, the IMF’s stance is contingent on the government providing detailed data and a robust fiscal strategy before any tax concessions can be considered.
“No final decision has been made regarding the new fiscal targets or conditions,” a source privy to the talks said.
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The IMF has underscored the need for provinces to curtail their expenditures and simultaneously boost their revenues. Furthermore, the Fund has insisted on measures to enforce the agricultural income tax, an area that remains contentious.
The Federal Board of Revenue’s (FBR) tax collection target for the new fiscal year is reportedly set in two parts, with an overall annual target proposed to exceed Rs14 trillion.
The IMF is also factoring in potential revenue from ongoing tax-related court cases, which amount to approximately Rs770 billion. Of these, cases worth around Rs250 billion are expected to be decided in favour of the FBR by June 30, while decisions on cases amounting to Rs500 billion could materialize in the next fiscal year.
“The IMF is thoroughly reviewing the data and questioning the economic team to ensure the viability of the proposed fiscal measures,” a government official said, requesting anonymity.
