ISLAMABAD: The government is awaiting approval from the International Monetary Fund (IMF) on proposals aimed at providing significant tax relief to the salaried class in the upcoming federal budget.

According to a report by a private television channel, the federal government is currently finalizing the budget for the fiscal year 2026-27. However, implementation of several key tax measures and relief packages depends on the IMF’s approval.

Sources cited in the report said the government has presented various proposals to the international lender aimed at providing relief to different sectors and introducing changes to the tax system.

The budget proposals include a reduction in income tax slabs for salaried individuals, a 2 percent cut in the super tax rate, and the abolition of the 1 percent advance income tax currently imposed on the export sector.

In addition, several incentives and facilities for the property sector are under consideration to encourage investment and business activity in the industry.

On the other hand, the report said proposals to increase taxes on certain products are also being discussed. According to sources, consultations with the IMF are ongoing regarding raising the General Sales Tax (GST) on solar panels, hybrid vehicles, and more than 20 other items to the standard rate of 18 percent.

It is worth noting that the government has also requested the continuation of relatively lower tax rates on electric vehicles to promote environmentally friendly technologies. Officials said the proposal has been presented in the context of energy security and environmental goals and is linked to the $1.4 billion Resilience and Sustainability Facility (RSF) programme.

According to official sources quoted in the report, tax collection targets remain a major challenge for the government. The Federal Board of Revenue’s (FBR) target for the current fiscal year has been revised down to Rs13.428 trillion, while a proposal is under consideration to increase it to Rs15.264 trillion for the next fiscal year.

Officials said detailed consultations between the government and the IMF are continuing on various fiscal options to achieve the ambitious revenue target.

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