IMF rejects tax relief on power bills

Proposals are under consideration to provide tax relief to the real estate and tobacco sectors.

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The International Monetary Fund (IMF) has rejected Pakistan's proposal to reduce the General Sales Tax (GST) on electricity bills.

The IMF's decision poses challenges to Pakistan's efforts to provide financial relief to consumers amid ongoing economic reforms, Express News reported on Friday.

According to sources, the global lender also declined Pakistan’s request to extend the winter relief package for the industrial and agricultural sectors for the entire fiscal year.

Meanwhile, discussions between Pakistan and the IMF continue regarding measures to reduce circular debt in the energy sector.

Pakistan briefed the IMF on its plan to tackle circular debt by securing a loan of Rs1.25 trillion from commercial banks at an interest rate of 10.8%. An agreement on this loan has reportedly been finalised.

Additionally, proposals are under consideration to provide tax relief to the real estate, property, beverage, and tobacco sectors. If approved by the IMF, tax burdens on these industries will be reduced.

For the next budget, there are suggestions to lower tax burdens on salaried individuals.

Moreover, a plan to collect Rs250 billion in taxes from various sectors, including retail, is in place. The final approval for all proposed measures will be subject to IMF approval, sources said.