The International Monetary Fund (IMF) and Pakistan are reportedly close to finalizing an agreement to ease income tax rates for salaried individuals in the 2025-26 federal budget.
According to a report by The News, detailed discussions between the IMF and the Federal Board of Revenue (FBR) took place on Friday night, resulting in a preliminary nod from the IMF to reduce tax rates across various income brackets. This move could bring tax relief worth an estimated Rs. 56 to 60 billion in the upcoming fiscal year.
The FBR suggested lowering the tax rate for the initial income slab — those earning between Rs. 0.6 million and Rs. 1.2 million annually — from the current 5 percent to 1 percent. This would cut tax liabilities on an income of Rs. 100,000 from Rs. 30,000 to Rs. 6,000. However, the IMF is leaning towards a middle ground of 1.5 percent, which would require a tax payment of Rs. 9,000.
For higher income levels, the proposal includes a 2.5 percent reduction per slab and a decrease in the highest tax rate from 35 percent to 32.5 percent. Final figures are still being worked out between the IMF and FBR teams.
The IMF has also recommended a phased adjustment of the 10 percent surcharge and Super Tax to streamline the tax structure.
In a separate development, the IMF expressed concern over Pakistan’s decision to allocate 2,000 megawatts of electricity for cryptocurrency mining without prior authorization from the Ministry of Energy and the National Electric Power Regulatory Authority (NEPRA).
