The Federal Board of Revenue (FBR) is negotiating with the International Monetary Fund (IMF) to reduce taxes on property transactions in the upcoming FY2026–27 budget, but officials say securing approval remains challenging.

During a briefing to the National Assembly Standing Committee on Finance, FBR officials said talks are ongoing over relief in withholding taxes applied under Sections 236C and 236K of the Income Tax Ordinance, which cover property sales and purchases. The IMF has not yet agreed to the proposed reductions, making the discussions difficult ahead of budget finalisation.

Officials also informed lawmakers that budget-making responsibilities have been shifted to the Tax Policy Unit under the Ministry of Finance as part of broader policy reforms. They added that property valuation benchmarks in several cities have already been revised downward to support activity in the real estate market.

The parliamentary committee, chaired by Syed Naveed Qamar, reviewed fiscal conditions and budget preparations for FY2026–27, with focus on taxation strategy, macroeconomic stability and structural reforms under the IMF programme.

Lawmakers were told that Pakistan’s economy is showing signs of stabilisation but continues to face significant risks, including weak revenue growth, high debt levels and rising inflationary pressure.

Economic indicators presented to the committee showed circular debt has climbed to Rs5.1 trillion, with Rs3.3 trillion in the gas sector and Rs1.8 trillion in electricity. External debt stands at $137.56 billion.

Members of the committee expressed concern over continued reliance on indirect taxation and petroleum levies, arguing that the tax base has not expanded despite repeated revenue measures. They also highlighted delays in fiscal documentation and limited parliamentary oversight of budget planning.

The committee further noted that provincial surpluses are increasingly being used to meet IMF targets, while development spending remains constrained due to debt servicing and recurring expenditures. Export performance was also flagged as weak compared to regional economies.

Lawmakers urged that the upcoming budget should prioritize long-term structural reforms, broader tax base expansion, and sustainable growth rather than short-term fiscal adjustments under external financing pressures.