Discussions between Pakistan and the International Monetary Fund (IMF) on the upcoming Budget 2026-27 have entered their final phase, with several key tax proposals currently under consideration.
According to sources, the IMF has urged Pakistan to increase the general sales tax (GST) rate from 18 percent to 19 percent as part of efforts to strengthen revenue collection. The proposal is being reviewed during ongoing negotiations between both sides.
The upcoming Budget is also expected to be larger than initially planned. Officials are reportedly considering increasing the overall size of the federal budget from Rs15.1 trillion to Rs15.5 trillion.
Sources further indicate that around Rs220 billion in new taxes may be introduced in the next fiscal year. These measures are aimed at improving government revenues and meeting fiscal targets agreed upon with international lenders.
One proposal under discussion relates to traders and small businesses. Authorities are considering a fixed tax scheme under which businesses with annual sales of up to Rs200 million would pay a fixed tax of Rs25,000. The proposal also includes a possible exemption from tax audits for eligible traders.
The suggested increase in GST remains one of the most significant proposals under review. If approved, the higher tax rate could affect a wide range of goods and services across the country. However, no final decision has been announced so far.
At the same time, policymakers are discussing potential relief measures in other areas. Reports suggest that a reduction of one to two percent in the super tax has been proposed to provide some support to businesses and taxpayers.
Changes for salaried individuals are also being examined as part of the Budget preparations. Officials are reviewing income tax slabs and may adjust the threshold for the highest tax bracket. These changes could impact thousands of salaried employees across Pakistan.
Any relief for the salaried class will depend on further consultations with the IMF and approval from the federal cabinet. Discussions are ongoing, and final decisions are expected before the budget is formally presented.
Economic experts believe the upcoming Budget will play an important role in shaping Pakistan’s fiscal direction for the next year. The government faces the challenge of increasing revenue while also addressing public concerns about rising taxes and living costs.
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With negotiations nearing completion, businesses, traders, and salaried workers are closely watching developments as the government prepares to unveil its fiscal plans for 2026-27.
