The International Monetary Fund (IMF) is urging Pakistani authorities to standardize the General Sales Tax (GST) at 18%, encompassing various items like unprocessed food, medicines, stationery, and POL products. The IMF estimates this move could generate 1.3% of the GDP, approximately Rs1,300 billion. However, the impact on inflation is not assessed.
Key recommendations include eliminating the Fifth Schedule, ending exemptions in the Sixth Schedule (except residential property), and scrapping reduced tax rates in the Eighth Schedule. The IMF proposes removing all zero ratings, except for exports, and bringing all goods to the 18% GST rate. Specific exemptions under the Sixth Schedule, covering items like vegetables, pulses, and books, are suggested to be restricted.
Additionally, the Eighth Schedule’s reduced rates on items such as natural gas and phosphoric acid are to be removed. The IMF emphasizes the removal of compliance-related distortions, including minimum taxes and surtaxes, and the elimination of the Ninth and Tenth Schedules.
These recommendations aim to simplify and streamline the tax system but may impact consumers with potential price increases. The Pakistani government will need to weigh these considerations while deciding on implementing these proposals.
Leave a Reply