ISLAMABAD: The Federal Board of Revenue (FBR) has finalised proposals for new taxation measures of nearly Rs 300 billion including a one percent increase in the standard rate of sales tax from 17 percent to 18 percent and changes in the withholding tax regime.
Sources told Business Recorder on Thursday that the approval of the Federal Cabinet would be required before the promulgation of the Tax Laws Amendments Ordinance, 2023.
In budget 2022-23, the net impact of the taxation measures stood at Rs355 billion. Through the amended Finance Bill 2022, taxation measures of over Rs600 billion were taken for 2022-23.
Now, it depends upon the government to accept or reject the FBR’s new taxation measures of approximately Rs300 billion under the mini-budget.
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The FBR recently moved a summary to Finance Minister Ishaq Dar to impose a lower-than-the-standard sales rate of 17 percent on petroleum products which was rejected.
The revenue impact of a 17 percent sales tax on petroleum products has been estimated at Rs90-100 billion in the last five months of the current year.
The FBR has worked out the revenue impact of Rs65 billion during Feb-June (2022-23) by increasing the standard rate of one percent sales tax from 17 to 18 percent.
Another proposal is to increase the rates of withholding taxes to immediately start generating revenue from the remaining period of the current fiscal year.
The proposal to raise the federal excise duty (FED) on sugary drinks would generate Rs60 billion.
The revenue impact of the proposed withholding tax on banking transactions of non-filers is nearly Rs45 billion.
The three percent flood levy could generate additional revenue of Rs60 billion.
The proposed increase in the rates of capital value tax rates on imported and locally-assembled vehicles has been estimated to generate an additional revenue of Rs10 billion.
The proposal to impose a tax on banks’ foreign exchange income has been estimated to generate Rs20 billion.
The proposed increase in the rate of advance tax on the purchase/sale of immoveable property would generate about Rs20-30 billion.
Copyright Business Recorder, 2023
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