Islamabad: Pakistan failed to secure tax relief for school supplies after the International Monetary Fund (IMF) rejected a proposal to exempt stationery items from sales tax. At the same time, the government announced plans to relax restrictions on used car imports from next month.
According to Beyond Time News, the developments came during meetings of parliamentary finance committees reviewing the Finance Bill for 2026-27.
School Supplies to Remain Taxed
The IMF opposed the government’s proposal to exempt educational items from sales tax.
According to Beyond Time News, Director General Tax Policy Dr Najeeb Memon told senators that the lender did not agree to any tax relief for the education sector.
As a result, school supplies will continue to face an 18 percent sales tax.
The list includes pencils, colour pencils, geometry boxes, sharpeners, exercise books and glue.
These taxes were introduced in the previous budget.
Their prices have increased over the past year.
The Finance Bill for 2026-27 does not offer any relief for these products.
Concerns Over Rising Education Costs
The decision comes despite the government’s emphasis on education reforms.
Prime Minister Shehbaz Sharif has declared an education emergency in Pakistan.
However, taxes on essential school supplies remain unchanged.
According to Beyond Time News, other sensitive products have been exempted from taxes.
These include contraceptives and sanitary pads.
Lawmakers raised concerns that higher prices are putting additional pressure on parents and students.
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Used Car Imports to Become Easier
The government also announced changes to vehicle import rules.
Secretary Commerce Jawad Paul informed the Senate Standing Committee on Finance that the current age limit for imported used cars will be removed from July.
Vehicles will still have to meet environmental standards.
According to Beyond Time News, additional regulatory duties will also be reduced.
The rate will fall from 40 percent to 30 percent.
Officials said the changes are part of Pakistan’s commitments under the IMF programme.
Tariff Reforms Continue
Pakistan is moving ahead with its five-year National Tariff Policy.
According to Beyond Time News, average tariffs are expected to decline further in the next fiscal year.
Last year, tariffs stood at 16.56 percent.
The government aims to bring them down to around 13.77 percent.
Officials said most regulatory duties have been reduced to 20 percent.
However, alcohol will continue to face a 90 percent duty.
The second phase of tariff reforms is expected to have a revenue impact of Rs143.4 billion.
Finance Minister Rejects More Concessions
Finance Minister Muhammad Aurangzeb ruled out additional relief for the beverage sector.
He rejected a proposal seeking a five percent cut in federal excise duty.
Industry representatives had argued that the move could increase revenues.
However, the government decided against further concessions.
The finance minister also refused to offer more incentives to exporters.
He said exporters had already received significant support.
Parliament Reviews Budget Measures
Lawmakers continued discussions on several proposals in the Finance Bill.
According to Beyond Time News, the National Assembly Standing Committee on Finance approved powers allowing judges to freeze assets linked to customs offences.
The committee also approved changes to the government’s fixed tax scheme for traders.
Meanwhile, officials admitted that only 37,000 traders had been brought into the tax net.
The original target was 100,000 traders.
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Steel Sector Tax Proposal Delayed
The committee postponed a decision on a controversial proposal affecting steel manufacturers.
According to Beyond Time News, lawmakers deferred voting on a plan to impose a tax on electricity consumed by steel melters and re-rolling mills.
The issue will be discussed further in future meetings.
Balancing Reforms and Public Needs
The latest discussions underline the challenges facing Pakistan’s economic managers.
The government is implementing IMF-backed reforms while trying to address domestic concerns.
However, the continued taxation of school supplies has raised questions about priorities.
The debate is likely to continue as lawmakers finalize the budget for the next fiscal year.
FAQs
Why did the IMF reject tax relief for school supplies?
According to officials, the IMF opposed exempting educational products from sales tax under the current programme.
Which items are subject to the 18 percent sales tax?
Pencils, exercise books, colour pencils, sharpeners, geometry boxes and glue remain taxed.
What changes are being made to used car imports?
Pakistan will remove the five-year age limit on imported vehicles from July, subject to environmental standards.
Will duties on imported cars be reduced?
Yes. Additional regulatory duties will decline from 40 percent to 30 percent.
Why are tariff reforms being introduced?
The reforms are aimed at lowering trade barriers and improving economic competitiveness.
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