ISLAMABAD: The government plans to get additional revenues of Rs480 billion in the upcoming budget through abolishing Income Tax and Sales Tax exemptions and improved administrative measures in order to materialize the FBR’s desired target of Rs5,800 billion.
However, ironically the Islamabad Capital Administration has slashed down property valuation rates in the federal capital instead of jacking it up to bring them at par with the market rates.
There will be slight adjustments in major taxes with the purpose to streamline the taxation system as the number of salaries slabs would be brought down, rental income would be adjusted, two dozen withholding taxes would be abolished, Point of Sale (POS) machine would be installed at 85,000 branded chains in urban centers with 12 percent for textile and 14 percent GST for other sectors and discretionary powers of tax officials would be curtailed to restore confidence of taxpayers.
According to fiscal framework agreed with the IMF, the FBR’s target for the next budget was envisaged at Rs5,800 billion on the basis of revenue collection of Rs4,700 billion achieved in the outgoing fiscal year. With nominal growth of 13.2 percent including real GDP growth rate of 5 percent and inflation at 8.2 percent, the FBR revenues could be increased to Rs5,320.4 billion. Now the remaining Rs480 billion will have to be collected through abolishing tax exemptions, upward adjustment in taxes in a few selected cases such as increasing tax burden for higher income slabs, rental income and abolishing withholding taxes by around two dozen, bringing down tax burden on telecom sector and slashing down tariff on import tariff lines in the coming budget.
