Pakistan’s recent efforts to provide relief to electricity consumers have hit a roadblock as the International Monetary Fund (IMF) declined the government’s request to waive General Sales Tax (GST) on electricity bills. This decision came during ongoing economic review talks between Pakistan and the IMF.
IMF Rejects GST Waiver on Electricity Bills
The Pakistani government had proposed removing GST from electricity bills to reduce the financial burden on consumers. However, the IMF rejected this proposal, sticking to its strict fiscal policies. The global lender has emphasized maintaining revenue collection and ensuring economic stability, which led to this decision.
No Extension for Winter Relief Package
In addition to refusing the GST waiver, the IMF has also turned down Pakistan’s request to extend the winter relief package for the industrial and agricultural sectors for the entire fiscal year. The package was initially introduced to provide temporary relief, but extending it further did not receive IMF approval.
Potential Tax Relief in Other Sectors
Despite these setbacks, the government is looking into providing tax relief in other areas. Reports suggest that tax reductions may be introduced for sectors like real estate, property, beverages, and tobacco. Additionally, salaried individuals could see some relief in the upcoming budget if the IMF gives the green light.
Government’s Plan to Collect Rs. 250 Billion in Taxes
To manage the country’s financial situation, the government has set a target of collecting Rs. 250 billion in taxes. This will be done through various measures, including trader-friendly schemes and improved tax compliance strategies. However, all these proposals still require final approval from the IMF before implementation.
Circular Debt Crisis and New Borrowing Plan
Another key focus of discussions with the IMF has been Pakistan’s growing circular debt in the energy sector. To tackle this issue, the government has decided to borrow Rs. 1.25 trillion from commercial banks at an interest rate of 10.8%. This borrowing plan aims to stabilize the energy sector and manage the financial crisis effectively.
Read Also: Pakistan Begins Talks with IMF to Unlock $1 Billion Loan!
