ISLAMABAD-The Federal Board of Revenue (FBR) is seriously contemplating to increase the withholding tax rates on electricity and gas bills and on cash withdrawal from the banks in the upcoming budget 2014-2015.
“The FBR will broaden the tax base of the country by brining non-taxpayers in the tax net in budget 2014-2015. Therefore, the government is considering some measures to compel the non-taxpayers to file their returns by increasing withholding tax rates on electricity and gas bills”, said an official of the FBR while talking to The Nation. He added that FBR is also considering doubling the withholding tax rates from 0.3 to 0.6 percent for the non-taxpayers.
It is worth mentioning here that aforesaid increase in withholding tax would be refundable for the non-taxpayers after they filed their tax returns. The FBR sources said that FBR is preparing tax proposals, which would be approved by the Finance Minister Senator Ishaq Dar.
A senior official of the FBR also informed that government would not increase the general sales tax (GST) for powerful sugar mafia, which is enjoying a special concession as they are paying only eight percent GST on sugar against the standard rate of 17 percent. It might be recalled here that government has decreased GST rate on sugar few years back in order to reduce commodity price that went up to over Rs 100 per kg.
The government might increase the tax on cigarettes in the budget.
Meanwhile, the government has no plan to either increase or decrease the standard rate of general sales tax, which is 17 percent currently. “The GST rate is already on the higher side, which cannot be further increased. Similarly, the government cannot afford to decrease it by one percent as this will cost Rs 40 billion to the national kitty”, the FBR official added.
The government has decided to keep tax collection target at Rs 2810 billion for next fiscal year in the budget 2014-2015, which would be 24 per cent higher than the revised target of outgoing year 2013-2014. Therefore, the government would have to take additional taxation measures in the budget. As the government is mulling to keep annual revenue collection target at Rs 2800 billion, the Federal Board of Revenue would require additional taxation measures of Rs 230 billion during next financial year 2014-2015. Sources informed that government would make Rs 2275 billion as base and Rs 295 billion would come from nominal growth.
They added that government would withdraw the tax exemptions worth of Rs 150 billion (0.6 percent of the GDP) in next fiscal year. He was of the view that government might take additional taxation measures worth of around Rs 80 to Rs 100 billion in the budget.