Pakistan and the International Monetary Fund will begin discussions on the next fiscal year’s budget from today (Wednesday).

Sources told ProPakistani the IMF team arrived in Islamabad on Tuesday and is scheduled to meet Finance Minister Muhammad Aurangzeb and the economic team at the Finance Division on Wednesday morning.

According to sources, the next federal budget will be prepared in close consultation with the IMF. In the first phase of discussions, the IMF staff mission will visit the Ministry of Finance and hold meetings with Finance Minister Muhammad Aurangzeb and State Bank Governor Jameel Ahmad.

Sources said the tax target for the next fiscal year is expected to exceed the current year’s revenue collection by Rs. 2 trillion. The government is considering setting a tax revenue target of more than Rs. 15.3 trillion in the upcoming budget.

During the budget talks, Pakistan and the IMF will discuss various proposals aimed at broadening the tax base. The discussions are also expected to focus on reducing sales tax exemptions and limiting government expenditures.

The government is also expected to hold consultations on increasing the tax-to-GDP ratio, while efforts to reduce the debt burden to around 70 percent of the economy will also come under discussion.

Sources said the government may set a target of filing 7.5 million income tax returns during the next fiscal year.

The Federal Board of Revenue has linked potential tax relief for the salaried class and the corporate sector to progress in expanding the tax net, sources added.

The IMF mission is expected to remain in Pakistan until May 20 for budget-related consultations.

Officials said discussions are also underway on the imposition of new taxes worth Rs. 230 billion in the upcoming budget. Around Rs. 700 billion in additional revenue is expected to be generated through new tax measures, while another Rs. 1.3 trillion could come from economic growth and inflation-led increases in tax collection.

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