The International Monetary Fund has urged Pakistan to increase its standard General Sales Tax (GST) rate from 18% to 19% for the 2026-27 fiscal year, citing a tax shortfall. The IMF also proposes raising the GST on hybrid vehicles from 8.5% to 18% and introduces a fixed‑tax scheme for retailers with turnover up to Rs200 million. While the government has resisted the hike, the IMF estimates the 1% increase could raise Rs250‑300 billion in revenue.
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Key Takeaways
The IMF is proposing to raise the standard GST rate from 18% to 19% for the 2026-27 fiscal year.
The IMF wants to increase the GST rate for hybrid vehicles from 8.5% to the standard 18% in the upcoming budget.
Retailers with a turnover up to Rs200 million would pay a fixed tax of Rs25,000 and be exempt from audit under the proposed scheme.
The IMF may allow a reduction in the super tax rate by 1.5% to 2% for the 2026-27 fiscal year.
The IMF estimates that a 1% increase in GST could generate Rs250-300 billion in additional revenue.
Primary source
Read the full article at GeoThis summary was published on VATfaqs.com on 1 June 2026. It relates to VAT developments in Pakistan. The original source is Geo.
