The government is preparing to scale back income tax and sales tax exemptions in the upcoming FY2026-27 budget as part of efforts to boost revenue and comply with commitments under the International Monetary Fund (IMF) programme.

According to official documents, the planned reduction in tax exemptions is expected to generate additional revenue worth around 0.15% of GDP. Authorities are also projecting another 0.15% of GDP in gains through ongoing reforms being implemented by the Federal Board of Revenue (FBR).

Together, these measures are expected to contribute roughly 0.3% of GDP in additional fiscal space.

The documents further indicate that Pakistan has assured the IMF it will introduce additional tax measures if revenue collection falls short of targets during the fiscal year. In such a scenario, new permanent tax steps may be activated to ensure compliance with agreed fiscal benchmarks.

The upcoming budget is also expected to incorporate further IMF-backed recommendations aimed at widening the tax base and strengthening revenue administration.

Officials say the FBR’s revenue strategy for the next fiscal year is built on both policy adjustments and administrative reforms designed to improve compliance and enforcement.

Under the reform roadmap, the FBR is projected to raise additional collections of around Rs7.022 trillion by December 2026 through expanded enforcement measures, policy changes, and broader tax system improvements.