Islamabad: The Federal Government has planned to enhance tax rates on recharge, cash withdrawal, and solar panels and systems. Pakistan has assured the International Monetary Fund (IMF) that it will impose Rs200 billion in additional taxes in January if revenue targets are missed or expenditures exceed agreed limits during the first half of the fiscal year.
Contingency Plan to Safeguard IMF Programme
The assurance aims to keep the $7 billion IMF bailout programme on track. According to The Express Tribune, the government’s contingency plan includes higher income tax rates on mobile and landline calls and an increase in withholding tax on cash withdrawals. These measures will only be activated if the Federal Board of Revenue (FBR) fails to meet its December targets or if spending surpasses fiscal thresholds.
Sales and Excise Duties Under Review
Other potential steps include raising the sales tax on solar panels from 10% to 18% and extending the federal excise duty (FED) to confectioneries and biscuits. Authorities may also consider raising the general sales tax rate to 19%, which could yield Rs225 billion annually. However, the focus remains on targeted tax adjustments rather than across-the-board hikes.
FBR Faces Major Revenue Shortfall
The FBR recorded a Rs198 billion shortfall in the first quarter, collecting Rs3.65 trillion by October 29. It needs another Rs460 billion within 48 hours to meet its four-month goal.
Proposed Tax Adjustments
Among the options, the withholding tax on cash withdrawals for non-filers may double to 1.5%, generating Rs30 billion annually. Taxes on landline calls could rise from 10% to 12.5%, while cellular call taxes may increase from 15% to 17.5%. Additionally, a 16% FED on confectioneries and biscuits could raise Rs70 billion each year.
