Sources familiar with the matter disclosed that the global lender has advised Pakistani authorities to eliminate the sales tax exemption on petrol and other POLs. Amidst ongoing negotiations, the government of Sharif has been directed to implement sales tax on petroleum products while maintaining a hefty levy of Rs60 on all petroleum products.
Petrol Price in Pakistan
The imposition of an 18 percent GST on petrol translates to a Rs50 hike per litre in Pakistan. As of March 2024, the price stands at Rs.279.75 per litre, and with the inclusion of GST, it is anticipated to surpass the Rs300 mark.
IMF officials have further suggested that Pakistan should apply an 18 percent sales tax on all items, including food, medicine, petroleum products, and stationery. Additionally, the global lending agency recommends applying this rate to unprocessed food, stationery, medicine, and various other commodities.
These new tax measures are being introduced to bolster revenue generation, aiming for 1.3 percent of GDP revenue, equivalent to Rs1,300 billion. These recommendations form part of a staff-level agreement between the IMF and Pakistan, marking the second and final review under Pakistan’s Stand-By Arrangement.
Pakistan’s economic and financial landscape has recently shown improvement due to prudent policy management and increased inflows from multilateral and bilateral partners since the first review.
