IMF proposes diesel, petrol price hike for cash purchases

ISLAMABAD: The International Monetary Fund (IMF) put forward several stringent measures to reform Pakistan’s fiscal policies ahead of the budget 2025-26, ARY News reported.

According to sources, the IMF has demanded an Rs2 per liter increase in petrol and diesel prices for cash purchasers, while an Rs2 reduction for transactions made via debit or credit cards to encourage digital payments.

The sources added that the IMF also suggested raising the sales tax on cash purchases from 18 to 20 percent to discourage the cash-based, undocumented economy in budget 2025-26. The monetary fund also recommended a 2percent reduction in sales tax on shopping done through debit or credit cards.

Crackdown against non-filers

The IMF also sought the complete elimination of the non-filer category, restricting vehicle and property purchases, the sources said and added that it also sought on international travel on non-tax filers.

The IMF proposed increasing the withholding tax on cash withdrawals by non-filers, raising it from 0.6 to 1.2 percent for amounts exceeding Rs50,000.

The sources further said that the IMF has recommended that the federal budget introduce a carbon levy on vehicles with engine capacities exceeding 850cc, including both locally manufactured and imported petrol and diesel-powered cars.

Read More: Pakistan pushes for tax relief to salaried class in IMF budget talks

It estimates that this move could generate up to Rs. 25 billion annually, which should be directed toward subsidizing electric motorcycles and rickshaws.

Additionally, the IMF has reportedly urged the government to eliminate all tax concessions on internal combustion engine vehicles, particularly those above 850cc.

It has specifically demanded that the sales tax on vehicles exceeding 850cc be increased from the current 12.5% to 18% in the upcoming budget.