The federal government plans to increase the advance tax on cash withdrawals for non-filers from 0.6% to 0.9% in the upcoming budget. This move could generate over Rs. 15 billion in annual revenue. Additionally, the government may raise the withholding tax on vehicles over 850cc and launch a crackdown on individuals not registered under the Tajir Dost Scheme. IMF has also requested electricity price hikes to tackle the power sector’s circular debt.
The federal government is mulling over increasing an advance tax on cash withdrawal by non-filers from banks in the upcoming FY budget 2024-25, ARY News reported on Wednesday quoting sources.
According to sources, FBR proposed to increase the advance tax on cash withdrawals from 0.6 percent to 0.9 percent for non-filers in next year’s budget.
The government had first imposed a 0.6 percent advance tax on non-filers’ is FY2023-24 budget.
Sources said that if parliament approves this tax proposal, the FBR could collect over Rs. 15 billion annually in revenue from non-filers.
Sources also added that FBR has also proposed to increase withholding tax on all sorts of vehicles, having engine capacity of 850cc or more.
Moreover, the govt has also decided launch crackdown against individuals who did not register themselves for Tajir Dost Scheme. The FBR has proposed to send notices to them.
The Tajir Dost Scheme is a voluntary tax compliance scheme designed to simplify tax filing for small businesses.
The FBR has presented these proposals before the IMF, sources said, adding that the proposals will be shared with PM Shahbaz Sharif for final approval.
Earlier it emerged that the International Monetary Fund (IMF) has demanded further increase in electricity prices, citing an additional burden of Rs 150 billion on the power sector.
According to sources, the IMF has asked the Ministry of Energy to increase the electricity tariff from Rs5 to Rs7 per unit in July.
The IMF has expressed concern over the failure to achieve the targets, and the power sector’s circular debt is expected to reach Rs 2500 billion by the end of the current financial year. The Ministry of Energy has been unable to control the circular debt, sources said.
The IMF has also asked the Ministry of Energy to share a plan to increase the power and gas tariffs in the next financial year. The mission is currently in talks with the Ministry of Energy officials to discuss the matter further.
It is worth noting that the power sector’s circular debt was supposed to be controlled at Rs 2310 billion by the end of the current financial year, but it will exceed the target by Rs 150 billion till June.
The recent announcement by the government to potentially increase taxes on cash withdrawal in the upcoming budget has sparked significant public interest and concern. This proposed measure aims to encourage digital transactions and curb the use of cash, as well as generate additional revenue for the government amidst economic challenges. While such a tax increase may incentivize the transition towards digital payments, it could also impact businesses, consumers, and the overall economy. It is essential for individuals and businesses to understand the potential implications and adapt their financial strategies accordingly. As discussions surrounding this proposal continue, staying informed and seeking professional financial advice will be crucial for effectively navigating any changes that may arise.
Source: ARY NEWS
The government plans to raise the advance tax on cash withdrawals for non-filers from 0.6% to 0.9% in the upcoming budget, aiming to generate over Rs. 15 billion annually. Additionally, there’s a proposal to increase withholding tax on vehicles with engine capacity of 850cc or more. The Tajir Dost Scheme non-registrants will face crackdown. IMF has demanded a further increase in electricity prices, citing concerns over circular debt reaching Rs 2500 billion. The Ministry of Energy is in discussions with the IMF regarding the tariff plan for the next financial year.
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