The Federal Board of Revenue (FBR) is grappling with a tax revenue shortfall of Rs33 billion for the current financial year.
From July 2023 to May 2024, the FBR collected Rs8,126 billion, slightly below the target of Rs8,159 billion intended to be collected for the 11 months of this financial year, according to informed sources.
To achieve the overall tax revenue target of Rs9,415 billion for the fiscal year, the FBR must now collect an additional Rs1,289 billion in June.
Despite this daunting task, there are positive indicators in the revenue collection trends. Compared to the first 11 months of the previous fiscal year, there has been a remarkable 31% increase in tax revenue.
Moreover, the FBR exceeded its revenue target for May 2024 by Rs15 billion, collecting Rs760 billion against a target of Rs745 billion. This performance in May provides some optimism as the FBR approaches the final month of the fiscal year with a substantial collection target.
Also Read: Govt proposes new taxes, increased GST, exemptions in upcoming budget
The government has introduced a proposal in the upcoming budget to levy new taxes on various sectors while abolishing certain exemptions. Despite the reservations of the IMF, the proposal aims to give tax exemptions to certain sectors in the budget.
The proposal outlines an increase in the annual income tax exemption limit by Rs300,000, potentially raising the exemption threshold to income worth Rs900,000 per year.
However, the proposed budget also includes measures to increase tax duties on imported goods and GST on food items. Notably, it suggests an 18% GST on baby milk, medical and surgical equipment, and imported packaged food. There are also plans to abolish withholding tax, remove sales tax exemptions, and raise customs duty rates. Furthermore, the proposal recommends increasing the GST rate on solar panels, which could impact the renewable energy sector.
