The International Monetary Fund (IMF) has rejected the Pakistani government’s proposal to reduce sales tax on electricity bills.
The government had sought the opinion of the IMF on the matter, but the international lender took the stand that no new tax exemptions could be granted under the loan programme.
The IMF argued that giving tax relief would jeopardize the achievement of tax collection targets. The decision comes amid concerns over the delay in the release of the 1 billion loan tranche under the IMF programme.
The Prime Minister expressed the need to approach the IMF regarding the reduction of electricity prices in the meeting of the Federal Cabinet on Tuesday.
However, the IMF’s stance has added challenges to the government’s efforts to ease the financial burden on consumers.
Officials highlighted that the 18 per cent general sales tax (GST) on electricity bills has been applied twice, once on the total bill amount, and again on the fuel cost adjustment, leading to higher costs for consumers. The cost is incurred.
Meanwhile, the government continues to explore various options to reduce electricity rates by Rs 10 per unit.
