The government of Pakistan has introduced sweeping revenue measures totaling Rs1.761 trillion for the upcoming fiscal year, a move that experts fear could exacerbate inflationary pressures.
The focus of these measures appears to be on eliminating various exemptions from sales tax and customs duty, as outlined in the Financial Bill 2024. Despite Federal Board of Revenue Chairman Zubair Tiwana’s reticence to divulge specific details during a technical briefing, it is estimated that the withdrawal of tax exemptions could generate an additional Rs500 billion in revenue.
Significant changes are proposed in income tax rates, particularly impacting the salaried class. Tax rates for different income brackets have been adjusted, with the aim of increasing revenue by Rs70 billion. Furthermore, adjustments in capital gains tax collection and the introduction of a new tax on the sale of securities are expected to bolster government revenue.
Taxation on assets, such as properties and securities, is also undergoing substantial revision. The proposed tax rates for property transactions vary depending on filer status, with higher rates for late filers and non-filers.
Additionally, changes in dividend rates, capital gains tax, and the taxation of export proceeds are expected to contribute to increased government revenue.
Sales tax measures include the imposition of taxes on various goods and services, such as stationery, poultry feed, and mobile phones. Federal Excise Duty is being imposed on items like nicotine pouches and sugar, while Customs Duty measures include additional tariffs on imported goods and the withdrawal of duty exemptions on certain items.
Overall, the government anticipates significant increases in tax revenue from these measures, which, coupled with improved enforcement and documentation, are aimed at addressing fiscal challenges and promoting economic stability.
However, concerns remain regarding the potential impact on inflation and the overall economy.
