The IMF’s decision came after the Ministry of Energy made a formal request to the Fund.
DNA
ISLAMABAD: The Pakistani government has been unsuccessful in convincing the International Monetary Fund (IMF) to agree to a reduction in sales tax on electricity bills.
According to sources, the IMF rejected a request from Pakistan’s Ministry of Energy, which had asked for a reduction in sales tax to alleviate the financial burden on consumers.
The IMF’s decision came after the Ministry of Energy made a formal request to the Fund, seeking approval for a decrease in sales tax rates on electricity bills.
However, the IMF maintained that, under the current loan programme, no exemptions or reductions could be granted for new taxes.
It was also clarified by IMF officials that reducing sales tax would hinder Pakistan’s ability to meet its tax collection targets.
Currently, Pakistan imposes an 18% Goods and Services Tax (GST) twice on electricity bills. The first tax is applied to the total bill amount, while the second is levied on fuel cost adjustments.
Earlier, the federal government has made a key decision to meet another significant condition set by the IMF, agreeing to impose a levy on captive power plants before the release of the next tranche of funding.
According to sources, the government has made preparations to implement this levy on captive power plants, which will be applied gradually to prevent a significant reduction in gas supply to these plants.
Sources indicated that the IMF has shown flexibility on the issue of gas cuts to captive power plants, and the levy will be introduced before the next IMF tranche is disbursed.
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