The International Monetary Fund (IMF) has demanded Pakistan to tax civilian and military pensioners and eliminate income tax exemptions from various pension schemes.
The IMF demand to tax retiring and retired individuals could potentially generate up to Rs. 25 billion in additional income tax annually, provided all tax exemptions on pension funds are withdrawn, reported Express Tribune.
The IMF team is in Islamabad to negotiate a new loan program with Pakistan. Islamabad is seeking two separate loan programs: the Extended Fund Facility (EFF) for structural reforms and the Resilience and Sustainability Facility (RSF) to tackle climate change-related challenges.
The proposed measures, including taxing pensions and gratuity, eliminating income tax credits for voluntary payments, and reviewing income tax and pension regimes for sole proprietors are seen as revenue boosters. However, they may further strain the country’s fixed-income population.
The IMF also seeks big taxes on pension funds, contributions, and income from approved Pension Funds overseen by the Securities and Exchange Commission of Pakistan (SECP) to generate up to Rs. 8 billion.
IMF
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A right decision if military pensioners are also being taxed along with civilians pensioners.