The International Monetary Fund (IMF) has significantly increased provincial tax collection targets for Pakistan in the upcoming fiscal year, calling for a 64 per cent rise as part of ongoing fiscal reforms under its support programme, according to official documents.
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Under the revised framework, provincial revenue authorities have been assigned a collective target of Rs1,947 billion for the 2026–27 financial year. This marks a substantial increase from the estimated Rs1,190 billion in the current fiscal year, representing an additional Rs757 billion in expected collections.
The documents outline a phased revenue mobilisation plan for the provinces, with targets set to gradually increase over the course of the fiscal year. By September 2026, provincial tax revenues are projected to reach Rs389 billion, rising to Rs798 billion by December 2026, and further increasing to Rs1,285 billion by March 2027.
The IMF-backed plan is part of broader structural reforms aimed at strengthening fiscal discipline and expanding the revenue base in Pakistan. Officials say the initiative seeks to enhance the role of provincial governments in tax collection and reduce reliance on federal support.
Alongside the revenue targets, additional tax policy changes are also under consideration. Sources indicate that several incentives and exemptions in key sectors may be withdrawn in the upcoming budget. These include tax concessions for electric vehicles and related components, some of which are set to expire in mid-2026.
The sales tax exemption on completely knocked-down (CKD) kits for electric vehicles is expected to end on July 1, 2026, while reduced tax rates for locally assembled electric vehicles will expire by June 30, 2026. Similarly, concessional tax regimes for hybrid vehicles are also set to lapse at the end of the current fiscal year.
In another proposed measure, the government is considering doubling the Climate Support Levy on petroleum products from Rs2.5 to Rs5 per litre, potentially generating over Rs90 billion in additional revenue annually.
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Officials say these steps are part of ongoing efforts to meet fiscal targets and ensure long-term macroeconomic stability under the IMF programme.