Pakistan’s Senate Standing Committee on Finance has supported a major demand from the stationery industry by recommending the restoration of sales tax exemption on educational stationery items from July 1, 2026, amid concerns that higher taxes could increase the financial burden on students and families.
The committee, chaired by Senator Saleem Mandviwalla, reached the decision during its fourth consecutive session on the Finance Bill 2026-27 at Parliament House. Lawmakers reviewed a broad range of fiscal, trade and taxation measures as part of the federal budget discussions.
The recommendation comes after the government proposed imposing an 18 percent sales tax on stationery products as part of wider efforts to broaden the tax base and reduce exemptions.
IMF Concerns Meet Resistance from Lawmakers
During the meeting, Dr. Najeeb Memon, Director General of the Tax Policy Unit at the Ministry of Finance, informed committee members that the International Monetary Fund (IMF) had urged Pakistan to reduce its reliance on sales tax exemptions.
He told the committee that stationery products do not fall under the category of essential food items and therefore do not qualify for exemption under the government’s taxation framework.
However, senators voiced strong reservations over the proposal, arguing that educational supplies should not face the same treatment as non-essential consumer goods.
Committee members highlighted the impact that higher taxes could have on school-going children and families already struggling with inflation and rising education costs.
The debate follows ongoing discussions between Pakistan and the IMF over fiscal reforms aimed at increasing revenue collection and improving tax compliance. The IMF has consistently encouraged Pakistan to narrow exemptions and expand documentation of the economy as part of broader economic reform programmes.
Industry Warns of Rising Education Costs
Representatives of the Federation of Pakistan Chambers of Commerce and Industry’s Stationery and Taxation Committee urged lawmakers to withdraw the proposed levy.
Riyaz-ud-Din told the committee that educational materials such as sharpeners, exercise books, glue, writing pads and colour pencils should remain exempt from taxation.
He noted that the government had previously decided against imposing the full 18 percent sales tax on stationery products and argued that such a measure would be inappropriate because of its direct effect on education expenses.
Members of the committee echoed those concerns. They said the proposed tax could make basic educational supplies more expensive and place additional pressure on households already managing higher living costs.
The committee subsequently recommended restoring tax exemptions on essential educational items, including pencils, pens, geometry boxes and other school supplies.
Lawmakers said the move would help ensure students retain access to affordable learning materials while preventing additional financial strain on parents.
The committee also reviewed taxation proposals relating to educational and charitable institutions. Following consultations with relevant authorities, members recommended amendments to existing legal provisions to improve transparency, effectiveness and alignment with public interest objectives.
The committee’s recommendations will now form part of the ongoing parliamentary review of the Finance Bill 2026-27 before final budget approvals.
