The International Monetary Fund (IMF) has recommended that Pakistan raise the Federal Excise Duty (FED) on fertiliser from 5% to 10% and impose a new 5% tax on pesticides in the forthcoming federal budget, The News reported.
If the IMF’s tax proposals are accepted, they could yield Rs30 to 40 billion from farmers in the next fiscal year.
However, the government is trying to negotiate lower rates or exemptions for these critical farm inputs. The government’s concerns come as the Agriculture Income Tax (AIT) is set to be implemented starting July 1, 2025, which is expected to generate significant revenue from the agricultural sector.
The IMF’s Middle East Director, Jihad Azour, met Finance Minister Mohammad Aurangzeb on Wednesday at the Ministry of Finance to finalise budget details.
Prime Minister Shehbaz Sharif is scheduled to meet with Jihad Azour on Thursday [today] to discuss the matter further and advocate for a reduced tax burden on farmers amid these new levies.
Separately, discussions are underway about introducing uniform taxation across all income sources and setting a single turnover-based registration threshold for both income and GST purposes to simplify compliance for businesses in the upcoming budget.
