Senate body informed IMF hasn’t asked FBR to impose agricultural tax.

ISLAMABAD  -  A delegation of International Monetary Fund (IMF) is visiting Pakistan on November 2 for talks regarding the initial assessment of the country’s $3 billion standby arrangement (SBA).

According to details, the finance ministry has started preparing for the upcoming talks with the global lending institution. The development was confirmed by the IMF’s resident representative, Esther Perez Ruiz, as the cash-strapped nation, currently functioning under a caretaker administration, endeavours to steer towards economic revival after the IMF approved its loan programme in July this year. The loan programme averted a sovereign debt default with Pakistan receiving its first $1.2 billion tranche from the Washington- based lender soon after the approval.

“An IMF team led by Mr Nathan Porter will field a mission to Pakistan starting in November 2 on the first review under the current Stand-By Arrangement,” Ruiz told the media.

Sources privy to the development informed that the first review talks will be held for the second loan tranche of $710 million and a staff-level agreement would pave the way for its approval by the IMF board in December. 

The meeting will discuss reforms in power sector, circular debt reduction plan, gas prices and tax reforms, the sources say. 

The federal government and the State Bank of Pakistan remain hopeful that they will comfortably complete the review on back of meeting the conditions agreed with the IMF in July.

Meanwhile, the finance secretary has convened an important meeting of all ministries, divisions, and departments for today to get an update on all structural benchmarks, indicative criteria and performance criteria agreed with the IMF for the end of September 2023. The finance ministry has made all-out efforts to restrict the budget deficit target within limits agreed with the lender. It had warned the provinces to trip down spending, and the latest provisional estimates suggest that Punjab and Sindh had made significant progress on it. Meanwhile, the Senate Standing Committee on Finance and Revenue was informed that the IMF has not asked the Federal Board of Revenue (FBR) to impose the agricultural tax in the country.

The Committee met under the chairmanship of Senator Saleem Mandviwalla here at the Parliament House. While deliberating on the reported news regarding “World Bank urges Pakistan to eliminate tax assumptions”, the committee was apprised that the news article has been examined in detail about the World Bank acquired exemption in taxation of real estate and agricultural sector and exemption threshold on personal income tax, however, it was informed by the FBR that no formal communication in this regard has been made by the World Bank. The FBR further apprised that tax on agriculture income is charged and collected by the provincial governments and the federal government cannot impose tax on agriculture income. It was further added that with regards to exemption threshold of both salaries and business individuals which are present is Rs 600,000/- per annum. It was apprised that neither any policy proposal is under consideration by the FBR to change this current exemption threshold limit nor the World Bank has recommended to FBR to lower this threshold limit for this class of persons.