ISLAMABAD: Inflation is likely to increase in the 2024-25 federal budget as the International Monetary Fund (IMF) has ‘asked’ Pakistan to reduce sales exemptions further.
As per details, the prices of milk, tea, sugar, rice, flour, and packed milk are likely to increase in the budget 2024-25 as the international lender has asked Islamabad further to reduce the sales tax exemptions for fresh loan.
The IMF has demanded imposing a 5-10% sales tax on the zero-rated sales tax sector, the sources said and added that pressure is being asserted to end tax exemptions in FATA and PATA by June 30.
According to budget proposals for the FY2024-25, Pakistan is likely to end exemption on sales and income tax, phase-wise.
The government is also considering imposing a sales tax on tractors and pesticides, potentially leading to price hikes for these essential agricultural products.
Currently, under the Sixth Schedule of the Sales Tax Act, pesticides and their active ingredients registered by the Department of Plant Protection are exempt from sales tax.
Earlier on Monday, IMF released an official statement following discussions with Pakistan. The statement confirmed that Islamabad has formally requested a new loan program from the IMF.
