IMF Proposes GST Hike from 18% to 19%, Officials Raise Inflation Concerns

The International Monetary Fund (IMF) has proposed increasing Pakistan’s general sales tax (GST) rate from 18 percent to 19 percent in the next fiscal year’s budget, according to sources. Pakistani officials have opposed the move, citing concerns over rising inflation.

Sources familiar with the matter said a one per cent increase in GST could generate an additional Rs 250 billion to Rs 300 billion for the national exchequer. Budget discussions are also considering higher taxes on solar panels, electric vehicles, and hybrid vehicles.

Reports indicate a recommendation is under review to raise the sales tax on hybrid vehicles from 8 percent to 18 percent and on electric vehicles from 1 percent to 18 percent, while the GST rate on solar panels could be increased from 10 percent to 18 percent. Implementation of these proposals may lead to significant price increases for electric vehicles, hybrid vehicles, and solar energy systems.

Officials at the Finance Ministry and the Federal Board of Revenue (FBR) said that no such proposals are currently under consideration and final budget decisions will be made at the appropriate time.