IMF suggests Pakistan to impose 18 per cent GST on food, medicines, petroleum: Report

The government of Pakistan has been advised by the International Monetary Fund (IMF) to impose an 18 per cent General Sales Tax (GST) on food, medicine, petroleum items, and stationery, reported ARY news.

The IMF experts in its report to Islamabad have suggested Pakistan’s newly elected government put an end to sales tax relaxation.

Following its December 2023 visit to Pakistan, the IMF team sent out a report in February 2024 that included several suggestions ahead of the FY2024-2025 budget.

The IMF has suggested placing a number of goods, such as unprocessed food, stationery, medicine, POL products, and others, under the standard 18 per cent GST rate.

It assessed that rationalizing GST rates could generate 1.3 per cent of Gross Domestic Product (GDP) revenue which equals Rs 1,300 billion in the national exchequer.

The IMF has overall demanded the removal of all the distortionary tax policy changes related to compliance, which includes the abolition of minimum taxes and additional taxes, as well as the abolition of the Ninth and Tenth Schedules.

In February, there were reports that Pakistan would seek a loan package from the International Monetary Fund in addition to $1.5 billion in climate finance.