ISLAMABAD: The IMF has asked Pakistan to increase the Federal Excise Duty (FED) on fertilizer from 5 to 10 percent and impose a 5 percent tax on pesticides in the upcoming budget.
However, Prime Minister Shehbaz Sharif, along with his team, is making efforts to avoid or reduce the proposed tax rates on major inputs of the farm sector.
The IMF’s visiting Director for the Middle East, Jihad Azour, held a meeting with Minister for Finance Mohammad Aurangzeb here at the Ministry of Finance on Wednesday for finalizing the upcoming budget.
Shehbaz is trying to convince the IMF to avoid this burden on farm inputs when the Agriculture Income Tax (AIT) will become operational from the next budget, with effect from July 1, 2025. There are different estimates with regard to the AIT imposition, but in the short term, the provinces may generate Rs40 to 50 billion from farmers, but it’s premature to share any exact revenue projections.
“The revenues estimate for increased FED on fertilizer from 5 to 10 percent and slapping FED on pesticides at the rate of 5 percent is projected to fetch tax revenues of Rs30 to 40 billion from the pockets of farmers in the next fiscal year if the wish of the IMF is fulfilled,” top official sources confirmed while talking to The News on Wednesday.
Jihad Azour is expected to meet Shehbaz Sharif on Thursday (today).
Another proposal under consideration between the IMF and Pak authorities is to ensure equivalent taxation of all sources of income and introduction of a single turnover-based registration threshold for both income and GST registration to all businesses in the upcoming budget.
