FY2024-25 Budget
ISLAMABAD: According to sources, the Pakistan government is gearing up to implement significant changes in the fiscal year 2024-25 budget, primarily under pressure from the International Monetary Fund (IMF).
One of the key proposals includes the cessation of tax exemptions, particularly in sales and income tax, in alignment with IMF demands.
Under the proposed budget for FY2024-25, Pakistan is poised to phase out exemptions on sales and income tax.
Additionally, the government is contemplating the imposition of sales tax on essential agricultural commodities like tractors and pesticides.
If implemented, this measure could potentially trigger price hikes for these crucial agricultural inputs, exerting financial strain on farmers.
Presently, pesticides and their active ingredients registered by the Department of Plant Protection enjoy exemption from sales tax under the Sixth Schedule of the Sales Tax Act.
Similarly, tractors, including road tractors for semi-trailers, are zero-rated for sales tax. However, discussions among budget planners revolve around revoking these exemptions and introducing a reduced rate of sales tax on tractors and pesticides in the upcoming fiscal year.
The proposed changes are anticipated to have a profound impact on the agricultural sector, with farmers likely to bear the brunt of increased costs for equipment and pesticides, thereby heightening financial burdens on agricultural activities.
Furthermore, commercial importers are expected to face withhold tax in the upcoming budget, a move projected to yield an additional Rs30 billion in tax revenue.
Meanwhile, the IMF has emphasized the necessity for Pakistan to undertake substantial cost-side reforms to address the inherent challenges plaguing the country’s energy sector and restore its long-term viability.
These reforms are deemed crucial for achieving fiscal sustainability and economic resilience in Pakistan.
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