Imran Khan-led govt eyes revenue boost through increased taxes

Published: March 31, 2019
Email
PM Imran Khan. PHOTO: PID

PM Imran Khan. PHOTO: PID

ISLAMABAD: In the budget for 2019-20, the federal government may increase the tax rate imposed on petroleum products, abolish exemption of withholding tax on the cottage industry, impose sales tax on various items and introduce uniform value added tax to generate revenue.

In addition to other steps, it may add Rs150 billion new taxes under the sales tax only.

According to the documents available with Daily Express, the Federal Board of Revenue (FBR) has prepared a draft of the budget recommendations for increase in tax collection for the next financial year and has identified potential revenue steps.

Only in terms of sales tax, eight big measures have been identified to generate an estimated Rs150 billion increase in revenue. The FBR has given estimated facts and figures of the expected revenue through every proposed step in the draft.

According to the documents, it is recommended to increase the sales tax on petroleum products. A total of Rs60 billion will be collected through this move under the sales tax.

Similarly, there is a recommendation to review all the special procedures to move towards uniform value added tax. Additional revenue of Rs25 billion can be earned through this change.

The third big step in terms of sales tax is to introduce rules to implement the track and trace system for electronic monitoring of the tobacco, sugar, beverages and fertiliser products.

The advice under examination is the enforcement of track and trace system for monitoring the production and supply of the products. With this step, the FBR is set to earn Rs20 billion additional sales tax.

The document states that there is also a recommendation to impose sales tax on different items in a bid to increase collection. This step will allow the FBR to collect an additional Rs10 billion.

A recommendation to abolish the zero rating and facility of discount tax is also included. The FBR will collect an additional sales tax of Rs10 billion through this step.

There is also a recommendation to end exemption from withholding tax for the cottage industry. This step will allow the FBR to earn an additional sales tax of Rs10 billion.

In the next budget, the sales tax regime for the grocery shops may also be changed and the government may introduce a Point of Sales (POS) system instead of turnover tax regime for retailers. This step will also allow the FBR to earn an additional Rs10 billion.

The 8th step proposed for the next financial year’s federal budget to increase sales tax collection is to abolish the exemption on items that have been exempted from sales tax. This step will allow the FBR to earn Rs5 billion additional revenue.

Sources said the Fiscal Policy Board will give final shape to such recommendations. Prior to this, the draft of budget recommendations will be discussed at Tax Reforms Implementation Committee and other forums and will be given final shape after consultation with stakeholders.

Facebook Conversations

Reader Comments (2)

  • Baacha
    Mar 31, 2019 - 12:53PM

    Instead to doing all this, end corruption in the organization which will generate a whopping Rs 500 billion annually. Recommend

  • Ahmad
    Mar 31, 2019 - 7:51PM

    Same old regressive band-air measures of increasing indirect taxes, while doing nothing to widen the direct tax net and bring large-scale landowners into the tax net.Recommend

Leave Your Reply Below

Your comments may appear in The Express Tribune paper. For this reason we encourage you to provide your city. The Express Tribune does not bear any responsibility for user comments.

Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments FAQ.

More in Business