Pakistan likely to hike sales tax on cash transactions

Pakistan is likely to hike the general sales tax (GST) from 18% to 20% on purchases made using cash at departmental stores, shopping outlets and grocery marts in the upcoming budget, sources at the Ministry of Finance told Nukta.

Moreover, consumers paying through cash at fuel stations will also likely have to pay a PKR 2 per liter higher levy, they said.

The Pakistan government and the International Monetary Fund (IMF) have been holding virtual discussions on the budget for fiscal year 2025-26. The sources said that the international lender is ready to accept the government's plans to offer relief but wants concrete answers on how the revenue shortfall will be plugged.

The main theme of the upcoming budget will be to reduce cash movement in the economy where currency in circulation has reached more than PKR 9.4 trillion. The IMF has been pressing the government hard to document the economy and raise tax collection.

Moreover, the sources said, the government was likely to ban non-filers from purchasing vehicles and properties and even travelling abroad.

Non-filers would also pay 1.2% on cash withdrawal of PKR 50,000 or above from the present slab of 0.6%, they added.