PM Shehbaz 'rejects' FBR's tax proposals for Budget 2024

ISLAMABAD: Prime Minister (PM) Shehbaz Sharif on Saturday rejected two major tax proposals of the Federal Board of Revenue (FBR) for the upcoming financial year’s Budget 2024, ARY News reported citing sources.

According to sources, the FBR had suggested increasing the sales tax on various items from 18% to 19%, as well as imposing up to 18% tax on petroleum products aimed to collect billions of rupees in taxes.

However, the prime minister directed the Chairman of FBR to prepare alternative proposals, sources added.

Sources said that the International Monetary Fund (IMF) had also suggested imposing sales tax on petroleum products, but the government had suspended the tax in March 2022.

Currently, the federal government is charging a development levy of Rs 60 per liter on petroleum products, sources added.

The Pakistan government will likely present its federal budget for the next fiscal year 2024-25 on June 7, with an estimated total expenditure of Rs 16,700 billion.

The government will present the budget 2024 with one eye on precarious economic conditions and the other on 24th ‘longer and larger’ bailout programme of International Monetary Fund (IMF).

According to sources, the initial estimate for expenditures on interest and loans is Rs 9,700 billion, while the initial estimate for subsidies is Rs 1,500 billion.

Sources said that the estimate for tax revenue is over Rs 11,000 billion, with direct taxes expected to contribute Rs 5,300 billion and federal excise duty expected to contribute Rs 680 billion.

Sales tax is likely to generate over Rs 3,850 billion, while customs duty is expected to generate over Rs 1,100 billion, sources said.

The initial estimate for non-tax revenue is Rs 2,100 billion, with petroleum levy expected to generate Rs 1,100 billion. The federal budget deficit is expected to be around Rs 9,300 billion, sources added.