IMF agrees to govt’s proposal for electricity price reduction

The International Monetary Fund (IMF) has agreed to the government’s proposal to reduce electricity prices, with a final decision expected next month.

Sources indicated that electricity base tariffs could be reduced by Re1 to Rs2 per unit, with both the National Electric Power Regulatory Authority (NEPRA) and the Ministry of Energy now authorised to adjust rates.

However, the IMF has expressed concern over delays in the privatisation of Distribution Companies (DISCOs). The IMF stated that improvements in the power sector are unlikely without first addressing the performance of these companies.

The IMF also rejected the Ministry of Energy’s proposed amendments to the NEPRA Act.

Meanwhile, crucial talks on the circular debt in the power sector were set to take place on Tuesday, with ongoing discussions on revenue collection by the Federal Board of Revenue (FBR), agricultural taxes, and property taxes.

A new IMF delegation is expected to arrive after Eid to discuss governance matters with the Pakistani government.

In related developments, Pakistan’s policy-level discussions with the IMF are ongoing, with the country updating the IMF mission on the implementation of strict conditions.

Pakistan has presented a landmark report on agricultural income tax legislation, bringing the tax rate on agricultural income in line with the corporate sector’s standards.

The provinces have now completed the necessary legislation, with uniform agricultural income tax rates across the country. According to the law, agricultural income up to Rs600,000 annually will not be taxed.

Income between Rs600,000 and Rs1.2 million will be taxed at 15%, while income between Rs1.2 and Rs1.6 million will face a fixed tax of Rs90,000. For income between Rs1.6 and Rs3.2 million, the fixed tax will be Rs170,000, with an additional 20% tax on earnings exceeding Rs1.2 million.

Further, for income between Rs3.2 million and Rs5.6 million, the tax will be fixed at Rs650,000, with a 40% tax on earnings above Rs3.2 million. Agricultural incomes of up to Rs5.6 million will incur a fixed tax of Rs1.61 million, and earnings beyond this will be taxed at 45%.