Govt Eyes Rs. 1.3 Trillion Additional Tax Collection Next Fiscal Year

The government has decided to increase reliance on withholding taxes in the coming budget (2024-25) to take additional taxation measures of Rs. 1.2 trillion to Rs. 1.3 trillion from 2024-25.

Sources told ProPakistani that the government would increase rates of withholding taxes on financial transactions of non-filers and increased tax rates on buying/selling of immovable properties, registration of vehicles, and revision in income tax slabs for salaried class.

The FBR will further increase the difference in withholding tax rates between filers and non-filers of returns. There is a proposal to increase advance income tax on the import of machinery by 1 percentage point, having a revenue impact of Rs. 2 billion per month.

The second proposal is to increase the advance income tax on the import of raw materials by industrial undertakings by 0.5 percent, with an expected collection of Rs. 2 billion per month. The third proposal is to raise advance income tax on the import of raw materials by commercial importers by 1 per cent having a revenue impact of Rs. 1 billion per month.

The fourth proposal is to increase withholding tax on supplies by 1 percent, expected collection of Rs. 1 billion per month. The fifth proposal is to increase withholding tax on services by 1 percentage point, expected collection of Rs. 1.5 billion per month, and increase withholding tax on contracts by 1 percent having a revenue impact of Rs. 1.5 billion per month. The sixth proposal is to raise the withholding tax on cash withdrawals from banks by non-filers from 0.6 percent to 0.9 percent.

Under the plan, the FBR is also considering repealing remaining exemptions for donations and non-profit organizations contained in the Second Schedule (Exemption Schedule) of the Income Tax Ordinance and making them eligible for tax credits. The FBR is reviewing the charitable donations tax credit, as well as the credit for certain persons, to assess whether changes to eligibility requirements would be desirable.

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