Pakistan likely to end sales, income tax exemptions in FY2024-25 budget

ISLAMABAD: The Pakistan government is likely to end tax exemptions in the FY2024-25 budget on IMF’s demand, ARY News reported, citing sources.

According to budget proposals for the FY2024-25, Pakistan is likely to end exemption on sales and income tax, phase-wise.

The government is also considering imposing a sales tax on tractors and pesticides, potentially leading to price hikes for these essential agricultural products.

Currently, under the Sixth Schedule of the Sales Tax Act, pesticides and their active ingredients registered by the Department of Plant Protection are exempt from sales tax.

Tractors, including road tractors for semi-trailers, are also zero-rated for sales tax. However, budget planners are discussing the removal of these exemptions and introducing a lower rate of sales tax on both tractors and pesticides in the upcoming fiscal year.

This could significantly impact farmers, increasing the cost of agricultural equipment and pesticides and potentially leading to a considerable burden on those who rely on these products.

Commercial importers are likely to be slapped with withhold tax in the upcoming budget, which is expected to generate Rs30bln additional in taxes.

The International Monetary Fund (IMF) has urged Islamabad for “strong cost-side reforms” for restoring the viability of Pakistan’s energy sector.