The International Monetary Fund (IMF) has rejected Pakistan’s proposal to reduce the general VAT (GST) on electricity bills.
The IMF’s decision presents challenges for Pakistan’s efforts to provide financial relief to consumers in the midst of ongoing economic reforms, Express News reported Friday.
According to sources, the global lender also rejected Pakistan’s request to extend the winter aid package to industrial and agricultural sectors for the entire financial year.
Meanwhile, discussions between Pakistan and the IMF continue with regard to measures to reduce circular debt in the energy sector.
Pakistan informed the IMF about his plan to tackle circular debt by securing a loan of RS1.25 trillion from business banks at an interest rate of 10.8%. An agreement on this loan is reportedly completed.
In addition, proposals are considered to provide tax relief to sectors for real estate, property, beverages and tobacco. If it is approved by the IMF, the tax burdens on these industries are reduced.
For the next budget, there are suggestions to lower the tax burdens on the employees.
Meanwhile, a plan to charge RS250 billion in taxes from various sectors, including retail, is in place. The final approval of all proposed measures will be subject to the IMF approval, the sources say.
