IMF proposes to increase GST to 19% in Budget 2026-27

Pakistan and the IMF have entered the final stage of negotiations on the federal budget for the upcoming fiscal year 2026-27.

According to sources, the IMF has put pressure on the government and proposed to increase the GST rate from 18 percent to 19 percent. The size of the new budget is proposed to be increased from 15.1 trillion to 15.5 trillion rupees.

The tax target for the current fiscal year has been reduced to 13,500 billion rupees, while the IMF is insisting on a tax target of more than 15,000 billion rupees.

The new budget also proposes to impose new taxes worth 220 billion rupees. It plans to introduce a fixed tax scheme for traders, under which a fixed tax of 25,000 rupees will have to be paid on sales of 200 million rupees annually and in return, exemption from audit will be given.

In addition, a reduction of one to two percent in super tax is also proposed. There is a possibility of changes in tax slabs for the salaried class and the threshold of the last slab may be increased. The final decision will be taken after further consultation with the IMF and approval by the federal cabinet.