Pakistan plans to increase tax-to-GDP ratio by imposing new taxes

The Pakistan government plans to increase tax-to-GDP ratio during the new fiscal year by imposing new taxes worth PKR 400 billion to reduce reliance on domestic and external borrowings.

The government has set a target to increase tax-to-GDP ratio to 11%.

The government and International Monetary Fund are holding virtual meetings to discuss budgetary measures for fiscal year 2025-26 that focus on stabilizing the economy and continuing reforms.

Sources told Nukta that discussions were held on the primary balance and revenue collection targets, exports performance and external debt payments.

It was discussed that capital gains tax on real estate sector would likely be increased to 35% from 15% at present. However, this is only a proposal and would be finalized later.

Sources said that the teams were of the view that the tax collected from the real estate sector was less than other sectors, which is why the tax rate on the real estate sector should be equivalent to corporate tax rate.

Discussions have also focused on cutting the tax rate for salaried class and the gap would be bridged through other avenues.

The tax rate on all salary slabs is likely to be reduced by 2.5% per annum.

IMF officials have been informed that tax collection during July to March was around PKR 8,453 billion, of which non-tax revenue was around PKR 4,027 billion.

The collection under non-tax head was higher by PKR 71 billion against the target of PKR 3956 billion, the sources said.

The collection from provinces was around PKR 684 billion while that from petroleum development levy was nearly PKR 833 billion.