ISLAMABAD: The International Monetary Fund has refused to allow Pakistan to abolish the 18% general sales tax on contraceptives and sanitary pads with immediate effect, rejecting a proposal submitted by the Federal Board of Revenue (FBR).
The issue was discussed in a virtual meeting with IMF officials, who rejected the FBR’s request and maintained that mid-year tax exemptions were not permissible under the programme, saying any tax relief could only be considered during preparations for the 2026–27 federal budget rather than in the middle of the current fiscal year.
The FBR had estimated the revenue impact of removing GST on contraceptives at Rs400–600 million and raised the matter with the IMF following the prime minister’s August 2025 instruction to make birth control products more affordable.
However, the IMF’s Fiscal Affairs Department showed little flexibility, citing Pakistan’s difficulty in meeting its revised revenue target of Rs13.979 trillion for FY26.
Similar proposals to reduce GST on sanitary pads and baby diapers were also rejected, with the IMF pointing to large revenue implications, particularly in the diaper market, estimated at around Rs100 billion.
The IMF also expressed concern that tax relief on such items could complicate enforcement and increase smuggling risks. Pakistan’s population growth rate currently stands at 2.55%, among the highest globally, with nearly six million people added annually.
