The International Monetary Fund has proposed imposing 18% GST on petroleum products and solar systems, raising concerns over further price increases.
According to sources within the Federal Board of Revenue, the IMF has presented several demands to the government, including increasing the tax collection target by more than Rs1,600 billion for the next fiscal year 2026–27, setting it above Rs15,600 billion.
Sources added that the IMF has called for the imposition of 18% GST on fuel, including petrol, which is currently subject to a zero GST rate. It has also urged the government to apply the same 18% tax on solar consumers and to withdraw tax exemptions on new housing.
The imposition of such a tax could lead to a sharp rise in petrol prices.
The IMF has further suggested introducing asset-based taxation for small businesses and traders. The current fiscal year’s tax target was reduced from Rs14,131 billion to Rs13,979 billion, yet a shortfall of Rs428 billion was recorded over the first eight months.
FBR officials warned that the shortfall in tax collection during the first nine months of the fiscal year could exceed Rs600 billion.
So far in March, more than Rs865 billion has been collected against a target of Rs1,367 billion. Officials attributed the gap to reduced imports due to the ongoing conflict and a slowdown in business activity caused by high fuel prices.
The FBR remains hopeful that revenues from super tax and surcharges will help bridge the gap, while finance ministry officials stated that further discussions with the IMF will take place before the new budget is finalised.
