Pakistan Govt to Cut Tax Exemptions to Meet IMF Revenue Targets in FY2026-27

The federal government of Pakistan is preparing to reduce income tax and sales tax exemptions in the upcoming fiscal year 2026-27 budget. This strategic move aims to increase revenue collection and fulfill fiscal commitments associated with the International Monetary Fund’s (IMF) program. Official documents indicate that reducing these exemptions is expected to generate additional revenue equivalent to 0.15 percent of GDP. Furthermore, authorities plan to secure another 0.15 percent of GDP through the Federal Board of Revenue’s (FBR) ongoing reform initiatives, bringing the total projected additional revenue to 0.3 percent of GDP. The government has assured the IMF that further permanent tax measures will be introduced if revenue collections fall short of targets during the fiscal year. These steps align with earlier IMF recommendations focused on tax broadening and administrative reforms. Under the current reform roadmap, the FBR aims to collect Rs. 7.022 trillion by December 2026 through enhanced enforcement and systemic improvements. This approach underscores the administration's determination to stabilize public finances and maintain compliance with international lending conditions.