ISLAMABAD: The International Monetary Fund (IMF) has demanded the imposition of income tax on high pension earners in the upcoming fiscal budget for 2025–26. According to sources, an IMF delegation is scheduled to arrive in Pakistan on May 14 to finalize budget targets.
The sources said during ongoing consultations between the government and the IMF, proposals are being considered under which individuals receiving a monthly pension of Rs400,000 or more may be taxed at a rate of 2.5%. This proposed measure would apply to retired civil and military employees, judges, and other members of the judiciary.
On the other hand, the government is also reviewing proposals to provide tax relief for low-income employees and the middle class. The current annual income tax exemption threshold, which stands at Rs600,000, may be increased to offer relief amid rising inflation.
Experts have expressed varying opinions on the anticipated tax reforms in the upcoming budget, while the government maintains that it is essential to expand the tax base and generate revenue from privileged segments of society.
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