• The IMF demands an 18% GST on fuel products in Pakistan, leading to expected price increases.
• Petrol prices are set to rise by Rs 50 per liter due to the 18% GST imposition, crossing the Rs 300 mark.
• Other items like food, medicine, and stationery may also face an 18% sales tax, as recommended by the IMF.

The International Monetary Fund (IMF) has requested Pakistan impose an 18% general sales tax (GST) on fuel products, leading to an expected increase in the prices of petrol and high-speed diesel, among other petroleum oils and lubricants (POLs).

Sources familiar with the situation disclosed that the global lender urged Pakistani authorities to eliminate the sales tax relaxation on petrol and other POLs.

Amid ongoing negotiations, the government has been advised to implement a sales tax on petroleum products while maintaining a record levy of Rs 60 on all petroleum products.

Petrol Price in Pakistan

The 18% GST on petrol will result in a Rs50 increase per liter in Pakistan, pushing the price above the Rs300 mark from the current Rs279.75 per liter as of March 2024.

IMF officials have also recommended that Pakistan apply an 18% sales tax on various items, including food, medicine, petroleum products, and stationery. This rate is suggested for unprocessed food, stationery, medicine, and other items as well.

These new taxes are being introduced to increase revenue by 1.3% of GDP, amounting to Rs 1,300 billion. These recommendations are part of a staff-level agreement between the IMF and Pakistan under Pakistan’s Stand-By Arrangement, focusing on the second and final review.

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