Islamabad, May 12, 2024 : Pakistan Government to Likely Eliminate Tax Exemptions in FY2024-25 Budget at IMF’s Request.
Budget proposals for FY2024-25 suggest Pakistan’s plan to gradually remove exemptions on sales and income tax. Additionally, the government is contemplating levying sales tax on tractors and pesticides, which could result in increased prices for these crucial agricultural items.
Presently, pesticides and their active ingredients registered by the Department of Plant Protection are exempt from sales tax under the Sixth Schedule of the Sales Tax Act.
Currently, tractors, including road tractors for semi-trailers, enjoy zero-rated sales tax. However, discussions among budget planners are underway to eliminate these exemptions and introduce a lower sales tax rate on both tractors and pesticides in the upcoming fiscal year.
Such changes could significantly affect farmers, potentially increasing the cost of agricultural equipment and pesticides and placing a substantial burden on those dependent on these products.
Moreover, commercial importers are expected to face withhold tax in the upcoming budget, estimated to generate an additional Rs30 billion in taxes.
The International Monetary Fund (IMF) has urged Islamabad to implement “strong cost-side reforms” to restore the viability of Pakistan’s energy sector.
