Summary IMF proposal, Pakistan taxes, GST on fuel, Solar system tax, Federal budget 2026-27, FBR, Tax targets
ISLAMABAD (Dunya News) – The International Monetary Fund has recommended imposing an 18% GST on petroleum products and solar energy systems in Pakistan, raising concerns over higher costs for consumers. The IMF has also suggested ending tax exemptions on new homes and increasing the federal budget’s tax collection target for the 2026-27 fiscal year by over Rs1,600 billion, bringing the proposed total to more than Rs15,600 billion.
Sources within the Federal Board of Revenue stated that the IMF has made several recommendations, including taxing fuel, solar systems, and new properties, as well as introducing asset-based taxes for small businesses and traders. Currently, GST on petroleum products is zero, but under the IMF proposal, it would rise to 18%.
Last fiscal year, the original tax target of Rs14,131 billion was revised down to Rs13,979 billion, yet a shortfall of Rs428 billion was reported in the first eight months. Officials warned that tax collection could see a further shortfall of over Rs600 billion in the first nine months of the current fiscal year, attributing the gap to import disruptions due to conflict and higher fuel costs affecting business activity.
The FBR is optimistic that revenues from super tax and surcharges will help cover the deficit. The Ministry of Finance confirmed that further discussions with the IMF will take place before the new budget is finalised.
The IMF has urged Pakistan to impose 18% GST on petroleum products and solar systems, end tax exemptions on new homes, and raise the 2026-27 tax collection target by over Rs1,600 billion. The proposal comes amid concerns over revenue shortfalls and rising fuel costs affecting business activity.
