Islamabad (Commerce Desk) — The International Monetary Fund (IMF) has proposed that Pakistan increase the standard General Sales Tax (GST) rate from 18% to 19% in the budget for fiscal year 2026–27.
According to sources, the Government of Pakistan has opposed the proposal, stating that such a move would further increase inflation and place additional financial pressure on the public. It is also feared that the GST hike could make solar panels, electric vehicles, and other goods more expensive.
Reports suggest that major tax increases on electric and hybrid vehicles are also under consideration in the upcoming budget. It has been proposed to end the current concessional rate on hybrid vehicles and raise it up to 18%, while applying a similar rate to electric vehicles.
Similarly, GST on solar panels may be increased from 10% to 18%, which could also impact the renewable energy sector.
Officials from the Ministry of Industries and Production say that these proposals are still under review and no final decision has been made yet.
According to sources, if a 1% GST increase is approved, it could generate an additional Rs. 250 to 300 billion annually in revenue.
The IMF maintains that due to the current fiscal situation and declining tax collection, such measures may be necessary to increase revenue, while Pakistani authorities are emphasizing the need to explore alternative solutions.