Preparations for Budget 2026-27 are underway, with the government deciding to reduce exemptions in the income tax and sales tax sectors to increase revenue collection.
According to documents, the move is expected to generate additional revenue, while further gains will come through the implementation of the FBR reform plan.
The new budget will include measures to reduce exemptions in income tax and sales tax.
The documents state that this measure is expected to generate additional revenue equivalent to 0.15% of GDP. Earlier estimates in the report also referred to additional revenue equivalent to 1.5% of GDP.
FBR reforms to boost revenue
Another 0.15% of GDP in revenue is expected through the implementation of the FBR reform plan.
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According to the documents, FBR’s additional revenue will reach Rs7,022 billion by the end of December 2026. The report also mentioned a figure of Rs7,222 billion.
Permanent tax policy changes
The budget will include steps to improve permanent tax policy and strengthen the tax collection system.
Officials expect these measures to generate additional revenue equivalent to 0.3% of GDP, while the broader report also mentioned revenue gains of up to 3% of GDP.
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The government has assured the IMF that additional tax measures will be taken if government revenue declines. In such a case, new tax measures of a permanent nature will be introduced. The budget will also include measures based on previous IMF recommendations.
FBR targets linked to higher tax collection
According to the documents, FBR’s revenue targets have been set with the aim of further increasing tax collection.
The planned reforms are part of the government’s broader effort to strengthen revenue generation and improve Pakistan’s tax system.
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