Friday, May 24, 2024

Upcoming Budget: Govt to Increase Tax on Cash Withdrawals

The federal government is contemplating raising the advance tax on cash withdrawals by non-filers from banks in the upcoming fiscal year budget 2024-25, according to sources.

According to these sources, the Federal Board of Revenue (FBR) has proposed elevating the advance tax on cash withdrawals from 0.6 percent to 0.9 percent for non-filers in the next year’s budget. If approved by parliament, could result in the FBR collecting over Rs. 15 billion annually in revenue from non-filers.

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Additionally, the FBR has suggested increasing withholding tax on all vehicles with engine capacities of 850cc or more.

Furthermore, the government has decided to launch a crackdown against individuals who have not registered for the Tajir Dost Scheme, a voluntary tax compliance initiative aimed at simplifying tax filing for small businesses. Notices are proposed to be sent to these individuals.

Read: IMF Likely to Demand Pension Reforms

These proposals have been presented before the IMF, with sources indicating that they will be shared with Prime Minister Shahbaz Sharif for final approval.

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In a separate development, the International Monetary Fund (IMF) has demanded a further increase in electricity prices, foreseeing an additional burden of Rs. 150 billion on the power sector.

The IMF has urged the Ministry of Energy to raise the electricity tariff from Rs. 5 to Rs. 7 per unit in July, expressing concern over the failure to meet targets. The power sector’s circular debt is anticipated to reach Rs. 2500 billion by the end of the current financial year, with the Ministry of Energy struggling to control it.

The IMF has requested the Ministry of Energy to outline a plan for increasing power and gas tariffs in the next financial year, with ongoing discussions between the mission and ministry officials.

Originally targeted at Rs. 2310 billion by the end of the current financial year, the power sector’s circular debt is expected to surpass this figure by Rs. 150 billion by June.

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