The government of Pakistan is planning to introduce a series of contingency tax measures targeting mobile calls, solar panels, and cash withdrawals, aiming to generate an additional Rs. 200 billion if revenue shortfalls or overspending occur during the first half of the fiscal year. This move comes as part of Pakistan’s ongoing commitment to the International Monetary Fund (IMF) to keep the $7 billion bailout program on track and maintain fiscal discipline.
According to reports, the proposed tax measures will be triggered only if the Federal Board of Revenue (FBR) fails to meet its end-December revenue target or if government spending exceeds agreed limits. These measures reflect a broader strategy by the government to ensure revenue collection stays aligned with IMF requirements while managing the fiscal deficit.
Among the targeted actions, the government may increase income tax rates on both mobile and landline calls. Currently, the withholding tax on mobile calls stands at 15%, and the plan would raise it to 17.5%, potentially generating Rs. 24 billion annually. Similarly, the tax on landline calls could rise from 10% to 12.5%, expected to bring in an additional Rs. 20 billion each year.
Cash withdrawals from banks are also on the radar, with the withholding tax for non-filers possibly doubling from 0.8% to 1.5%. This move is projected to generate around Rs. 30 billion annually and incentivize more individuals to enter the formal tax system. These measures are part of a broader set of targeted interventions designed to stabilize revenue streams without immediately resorting to blanket tax increases.
In addition to these measures, the government is considering raising the sales tax on solar panels from 10% to 18%, reflecting both a revenue-generating approach and an effort to balance energy sector subsidies with fiscal sustainability. There are also proposals to expand the federal excise duty (FED) to include confectioneries and biscuits, which could collect an estimated Rs. 70 billion per year. If combined with existing sales taxes and levies, the effective tax rate on these processed foods could reach 38%.
The FBR has faced significant challenges in meeting its revenue targets this fiscal year. Data as of October 29 indicates a Rs. 198 billion shortfall in the first three months, with total tax collection at Rs. 3.65 trillion. To meet its four-month goal, the FBR would need to collect an additional Rs. 460 billion in just 48 hours, highlighting the urgency behind these proposed measures.
Meanwhile, provincial authorities have deferred the collection of higher agriculture income taxes in Sindh and Punjab, placing additional pressure on federal revenues. The IMF has maintained its primary budget surplus target of 1.6% of GDP, or Rs. 2.1 trillion, while the World Bank has revised Pakistan’s economic growth forecast upward to 3% following less severe flood losses than initially anticipated.
The government anticipates recovering approximately half of the projected Rs. 200 billion from these additional taxes between January and June 2026, subject to final approvals and IMF agreement on fiscal targets. These measures illustrate the balancing act Pakistan faces in maintaining fiscal discipline while continuing to support economic growth and digital infrastructure development across the country.
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