Representational image. PHOTO: REUTERS
In order to give final shape to the budget proposals, the FBR has started consulting the Economic Coordination Committee (ECC) on Wednesday interacted with the ECC through a video link session to discuss budget proposals for inland tax, income tax, sales tax and the federal excise duty (FED). Recommendations on customs were reviewed on Thursday.
The FBR spokespersons were not available for comment on the matter. However, according to the documents available with Express News, a proposal has been made to increase the holding period for capital gain on immovable property and securities.
Through this step, the federal government will be able to get Rs20 billion. A recommendation for presumptive taxes on offshore assets is also made with the additional revenue promise of Rs5 billion.
There is also a proposal to amend ADCIR mechanism and appeal through which an additional revenue of Rs10 billion is expected. Similarly, an increase of custom duty rate is also proposed to boost the revenue by Rs47 billion.
A recommendation for rationalisation of custom duty slabs is also given to get Rs24 billion. In addition, exemption of custom duty on the LNG export may be withdrawn and replaced by 5 per cent duty after which an overall revenue of Rs95 billion could be generated.
Other proposals include withdrawal of tax exemptions on withholding taxes for cottage industry, imposition of sales tax on retail prices of several goods and introduction of uniform value added taxes through which Rs150 billion could be generated.
According to sources, the FBR and the ECC will have a comprehensive discussion on the draft of the budget proposals and the final shape of the recommendations will come after consultation with all stakeholders. The final shape to the proposals will be given by the fiscal policy board.
In addition to tax reforms committee, the proposals will be discussed in detail also at various other forums. The FBR proposal draft has identified measures for potential revenue targets. As per the draft, changes in sales tax can generate additional revenue of Rs150 billion.
There is a proposal to impose additional taxes on petroleum products to generate Rs60 billion. Similarly, all special procedures for gradually increasing uniform value added tax is also proposed through which sales taxes may increase by up to Rs25 billion.
Rules have been proposed to electronically monitor production and supply of tobacco, sugar, beverages and fertilizers through a track-and-trace system which can provide the FBR Rs20 billion.
Several products previously exempted from sales tax are proposed to be taxed in order to generate an expected additional revenue of Rs10 billion. The government also plans to withdraw zero rating and tax rebates on several products and services to generate an additional Rs10 billion.
Withdrawal of withholding tax exemption on cottage industry is likely to yield Rs10 billion for the FBR while there is also a proposal to revise the tax regime for retailers.
After this revision, retailers previously giving taxes on general turnover regime will pay taxes based on POS records to generate an additional revenue of Rs10 billion. Several products exempted from taxes are proposed to be brought in the tax net to get a revenue of Rs5 billion.
The potential revenue draft chalked out by the FBR has already been shared at the top levels, including the Ministry of Finance and the ECC. After consultation with all stakeholders, the recommendations will be given final shape and presented for the cabinet's approval.
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