IMF's big demand: Proposal to impose 18% GST on petrol and solar systems

The International Monetary Fund has demanded significant tax reforms from Pakistan in the budget for the upcoming fiscal year 2026-27, under which it has been proposed to impose 18 percent GST on petroleum products and solar systems.

According to sources, the GST rate on petroleum products is currently zero, however, if this proposal is approved, fuel prices may increase significantly. Similarly, there is a possibility that alternative energy will also become expensive due to the imposition of tax on solar systems.

Sources at the Federal Board of Revenue say that the IMF has proposed to increase the tax collection target to more than Rs 15,600 billion, which is about Rs 1,600 billion more than the current target.

In addition, asset-based taxation on small traders, elimination of tax exemption on new homes and other tax measures are also under consideration. According to officials, there is a significant decline in tax collections in the current fiscal year, and the shortfall is likely to reach Rs 600 billion in the first 9 months.

According to the Ministry of Finance, further negotiations will be held with the International Monetary Fund before a final decision is made, after which a decision will be made to include or reject these proposals in the budget.