In the upcoming budget, the Pakistani government is considering raising agricultural input taxes significantly. Proposals include a new 5% levy on pesticides and a 5% rise in the Federal Excise Duty (FED) on fertilizers from 5% to 10%. The implementation of these measures is projected to yield an estimated Rs50 billion in supplementary revenue for the fiscal year 2025–26. The government has pledged to the International Monetary Fund (IMF) to mitigate market distortions, which entails raising taxes on agricultural inputs.
In addition to the agricultural input taxes, the government is considering reducing the super tax rate by 2% to 8%, contingent upon identifying alternative revenue sources. Nonetheless, this decrease may lead to a deficit in revenue amounting to Rs28 billion.
The suggested tax measures constitute a component of the government’s comprehensive strategy aimed at attaining a tax target of Rs14.3 trillion for the forthcoming fiscal year, in accordance with IMF terms to bolster fiscal sustainability and mitigate market distortions.
