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Federal Govt is likely to enhance tax on cash withdrawals by non-filers in

LAHORE/ISLAMABAD: The federal government is considering increasing the advance tax on cash withdrawals by non-filers from banks in the upcoming FY 2024-25 budget.

According to these sources, the Federal Board of Revenue (FBR) has proposed raising the advance tax on cash withdrawals for non-filers from 0.6 percent to 0.9 percent in the next budget.

The 0.6 percent advance tax on non-filers was initially imposed in the FY 2023-24 budget.

Sources indicate that, if approved by parliament, this tax increase could generate over Rs. 15 billion annually from non-filers.

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

The government has also decided to crack down on individuals who have not registered for the Tajir Dost Scheme, a voluntary tax compliance program designed to simplify tax filing for small businesses. The FBR plans to issue notices to these individuals.

These proposals have been presented to the International Monetary Fund (IMF) and will be shared with Prime Minister Shehbaz Sharif for final approval, sources said.

In related news, the IMF has demanded further increases in electricity prices, citing an additional burden of Rs 150 billion on the power sector. The IMF has asked the Ministry of Energy to raise the electricity tariff by Rs 5 to Rs 7 per unit in July.

The IMF has expressed concerns about unmet targets, with the power sector’s circular debt expected to reach Rs 2,500 billion by the end of the current financial year. Despite efforts, the Ministry of Energy has been unable to control the circular debt.

Furthermore, the IMF has requested a plan to increase power and gas tariffs in the next financial year. Discussions between the IMF mission and Ministry of Energy officials are ongoing.

The power sector’s circular debt was expected to be controlled at Rs 2,310 billion by the end of the current financial year, but it is projected to exceed this target by Rs 150 billion by June.

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I am an experienced writer, analyst, and author. My exposure in English journalism spans more than 28 years. In the past, I have been working with daily The Muslim (Lahore Bureau), daily Business Recorder (Lahore/Islamabad Bureaus), Daily Times, Islamabad, daily The Nation (Lahore and Karachi). With daily The Nation, I have served as Resident Editor, Karachi. Since 2009, I have been working as a Freelance Writer/Editor for American organizations.

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