Govt to ‘increase’ tax on cash withdrawal in upcoming budget

The federal government is mulling over increasing an advance tax on cash withdrawal by non-filers from banks in the upcoming FY budget 2024-25, ARY News reported on Wednesday quoting sources.

According to sources, FBR proposed to increase the advance tax on cash withdrawals from 0.6 percent to 0.9 percent for non-filers in next year’s budget.

The government had first imposed a 0.6 percent advance tax on non-filers’ is FY2023-24 budget.

Sources said that if parliament approves this tax proposal, the FBR could collect over Rs. 15 billion annually in revenue from non-filers.

Sources also added that FBR has also proposed to increase withholding tax on all sorts of vehicles, having engine capacity of 850cc or more.

Moreover, the govt has also decided launch crackdown against individuals who did not register themselves for Tajir Dost Scheme. The FBR has proposed to send notices to them.

The Tajir Dost Scheme is a voluntary tax compliance scheme designed to simplify tax filing for small businesses.

The FBR has presented these proposals before the IMF, sources said, adding that the proposals will be shared with PM Shahbaz Sharif for final approval.

Earlier it emerged that the International Monetary Fund (IMF) has demanded further increase in electricity prices, citing an additional burden of Rs 150 billion on the power sector.

According to sources, the IMF has asked the Ministry of Energy to increase the electricity tariff from Rs5 to Rs7 per unit in July.

The IMF has expressed concern over the failure to achieve the targets, and the power sector’s circular debt is expected to reach Rs 2500 billion by the end of the current financial year. The Ministry of Energy has been unable to control the circular debt, sources said.

Also read: IMF demands 18% GST on petrol

The IMF has also asked the Ministry of Energy to share a plan to increase the power and gas tariffs in the next financial year. The mission is currently in talks with the Ministry of Energy officials to discuss the matter further.

It is worth noting that the power sector’s circular debt was supposed to be controlled at Rs 2310 billion by the end of the current financial year, but it will exceed the target by Rs 150 billion till June.