- FBR Eyes RS100 billion revenue reinforcement through tax revisions.
- Tobacco, real estate and drinks can see lower taxes.
- Govt hopes that tax reductions will revive commercial transactions.
Islamabad: Faced with a downward revision with its annual tax collection objective, the Federal Board of Return (FBR) proposed to the International Monetary Fund (IMF) a reduction in tax rates for the tobacco, real estate, construction and drinks sectors for the next three months, The news reported on Friday.
The FBR has provided that current high tax rates have considerably reduced transaction volumes in these sectors. By lowering prices, the tax machine plans to generate more than 100 billion additional income rupees between April and June from the current financial year.
The Pakistani authorities have transmitted their proposal to the IMF but remain uncertain if the tax reductions will be implemented during the current financial year or incorporated in the 2025-26 budget.
The IMF has evaluated that with an application and a full recovery, the FBR tax collection could affect 12,480 billion rupees until the end of June 30 against the fixed objective of RS12 970 billion. The High-Ups FBR have presented a simulation under the historical trends in the collection of income made during the last four months over a certain period.
They have made total efforts that with the resumption in income affairs blocked in court, the annual tax collection objective could be materialized.
After hearing the Pakistani team, the IMF tax team incorporated all the data and details available in its model.
They have created an evaluation income collection could maximum 12,480 billion rupes compared to the desired target of 12,970 billion rupees, there will therefore be a deficit of 490 billion rupees. During these discussions, the High-Ups FBR proposed that federal excise duties (Fed) on cigarettes should be revised upon 25%.
They cited the planned tax collection of the industry could increase by 44 billion rupees in the last quarter of the current financial year on the basis of a drop in projection volume, which would be moved to taxpayer cigarettes.
For the real estate / construction sector, FBR proposed that the cost of transaction on real estate must be rationalized, because the restraint to the restraint on the seller and the buyer under 236C and 236k could be adjusted downwards. The FBR has provided for a reduction in property retention rates, tax collection could increase by 20 billion rupees.
The IMF was informed that an unprecedented increase in tax rates has led to the purchase and sale on stamp papers, and without payment of rights and taxes.
The same scenario applied to the drinks sector, where the volume of the tax sector experienced a major decline resulting from the need to reduce Fed levels for drinks.
Govt presents a solar panel price plan at the IMF
Meanwhile, the government also shared a plan with the mission of the VMI on a visit to rationalize the electricity rate for the net measurement of solar panel owners.
As part of the proposed plan, the excess units generated by the owners of solar panels would be purchased by the government at significantly lower rates.
Currently, excess units are purchased at RS27 per unit, but the government now proposes to reduce this rate to around RS10 per unit. However, the IMF has raised concerns about how the government would address the question of owners of solar panels who remain out of network.
Although the government has not yet provided firm commitment, the IMF has reported this problem, citing the reports of a rapid increase in solar facilities. These reports suggest that the growing tendency of solar adoption could degenerate in the months and years to come, potentially creating challenges for the overall efficiency of the energy sector.
On the other hand, the government informed the IMF of the need to rationalize the power prices. Currently, there are 104 power plants operating across the country, 18 of which belonging to the government and 86 are independent electricity producers (IPP).
Until now, the government has dismissed five ineffective power plants and managed to negotiate prices discounts with 14 PPI. In addition, pricing discounts have been made for eight PPIs based on bagasse.
“The government is now renegotiating the remaining PPI. There is also a proposal to use the available budgetary space created by the burden of the maintenance of the reduced debt, which amounts to RS1.3 Billions. These measures will help the government to reduce the reference rate, ”confirmed the main official sources while speaking to The news THURSDAY.