Budget 2021-22: The federal budget is scheduled to be announced on June 11, but Revenue Division sources say top tax officials are still discussing key revenue measures.
According to the report, contrary to the claims of the government’s economic team that the forthcoming budget will be tax-free, in fact, the budget is expected to impose a substantial burden of direct and indirect taxes on the common man.
The Federal Board of Revenue (FBR) has been tasked to collect additional revenue of over Rs. 10 trillion in the budget for the current financial year, 2021-22.
This additional revenue will be generated through growth in the economy and inflation, including the elimination of reduction in sales tax, income tax, concessional tax rates.
It is expected that the revenue collection for the current financial year could be around Rs. 47 trillion.
The International Monetary Fund (IMF) is asking Islamabad to propose a revenue collection target of over Rs. 58 trillion for the financial year 2022.
The IMF wants Islamabad to withdraw as many exemptions as possible, rather than relying on revenue collection through administrative measures.
Negotiations with the IMF on revenue are ongoing and an agreement is likely to be reached on most tax issues.
The cabinet meeting, chaired by Prime Minister Imran Khan, will give final approval to revenue proposals that are politically sensitive in some respects.
However, proposals to further reduce customs duties on raw materials, semi-finished products, especially the value-added textile sector, are also on the agenda.
As part of the facility, the government is considering reducing rates from the country’s textile industry, especially textiles.
Similarly, the government may reduce the duty on raw materials for the steel sector, which would be an unprecedented package for the value-added sector.
The three broad pillars on which the budget has been prepared include no new taxes, expansion of the tax base and bringing e-commerce under the tax net.
The Rs 140 billion corporate rebates introduced by the Presidential Ordinance will now be made part of the Finance Bill 2021.
In the case of income tax, there has been strong resistance for salaried and non-salaried persons to make any change in the slab or tax rate. A few other income tax exemptions from the second schedule are also under consideration.
It is proposed to document the sales of 60,000 to 70,000 large retailers under the Point of Sales.
The FBR has also put forward a number of suggestions for documenting debit or credit card payments.
At the same time, measures have been proposed to effectively tax e-commerce as a new sector.
Pakistan has reached an agreement with the IMF that there will be no change in tax rates in areas where inflation is expected to rise.
Under this parameter, the government will not withdraw discounts on food, health and education items in the next budget.
The government is ready to present the Federal Budget 2021-22 on Friday (June 11), keeping in mind the impact of the coronavirus pandemic, which has badly affected the world economies.
Federal Finance Minister Shaukat Tarin will present the budget in the parliament.
Sources said the budget would focus on measures to mitigate the sufferings of the people, transforming the agriculture sector and bolstering businesses.
The document would also give attention to fiscal management, revenue mobilization, measures for economic stabilization and growth, reduction in non-development expenditures; boost in exports, besides job creation, and people-friendly policies for the socio-economic prosperity of the country.
It would also focus on social sector development and would introduce reforms for improving governance and boosting private sector investment.
The sources said the government would introduce measures for bringing improvement in the tax collection system, instead of levying new taxes.
The document would entail broadening the tax base and facilitating the taxpayers. A strong revenue generation will play a crucial role in achieving the economic growth targets.
Meanwhile, the government will present the Economic Survey for 2020/21 in the parliament on Thursday (June 10).
The survey would highlight the overall performance of the economy during the outgoing fiscal year, providing realistic feedback and a basis for future planning.