IMF Allows Pakistan to Cut Tax Rates for Salaried Class in Upcoming Budget

The International Monetary Fund (IMF) and Pakistan are nearing an agreement to reduce income tax rates for the salaried class in the 2025-26 budget. During intense talks between the IMF and theFederal Board of Revenue (FBR)on Friday night, the Fund granted broad approval to lower tax rates across several income slabs for salaried individuals. This reduction is estimated to provide relief worth Rs. 56-60 billion in the next fiscal year, reported TheNews. The FBR proposedreducing the tax rateon the first income slab (annual earnings of Rs. 0.6 million to Rs. 1.2 million) from 5 percent to 1 percent. Under this, tax on income up to Rs. 100,000 would fall from Rs. 30,000 to Rs. 6,000. However, the IMF favors a compromised rate of 1.5 percent, which would mean Rs. 9,000 tax payable. For higher income slabs, a proposed 2.5 percent reduction per slab and acut in the top tax ratefrom 35 percent to 32.5 percent are under consideration. Final calculations are still pending between the IMF and FBR. The IMF also pushed for gradual rationalisation of the 10 percent surcharge and Super Tax. In addition, the lender criticizedPakistan for allocating 2,000MW of electricity to cryptocurrency miningwithout prior approval from the Energy Ministry and NEPRA.