Govt and IMF to finalise tax proposals for next fiscal year

ISLAMABAD: The government and the International Monetary Fund (IMF) will finalise tax proposals for the upcoming financial year 2024-25, according to sources familiar with the matter.

According to sources, the tax target for the next fiscal year is expected to be set at Rs12,900 billion, a significant increase from the current fiscal year’s target of Rs9,400 billion.

Read more: Pakistan, IMF disagreement continues over tax exemptions on FATA

To meet the goal, the Federal Board of Revenue (FBR) will need to collect an additional record sum of Rs 3,000 billion.

Alongside these tax adjustments, several changes in pricing are expected in the upcoming budget. Sources suggest that items such as canned milk, cigarettes, nicotine pouches, copies, books, markers, and pins are likely to see price hikes.

Luxury items including chocolates and food supplements, as well as goods from the Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) such as cooking oil and steel goods, are expected to become more expensive.

Imported vehicles and phones are also slated to see price increases, aligning with the government’s efforts to bolster domestic industries and revenue streams.

Read more: Budget 2024-25: Imported used cars to become more expensive

The upcoming budget is expected to introduce measures aimed at enhancing tax compliance. Sources indicate that non-filers may face taxes on cash withdrawals from banks, incentivising greater participation in the formal economy.

The budget is set to impose heavy fines on smuggling activities and non-duty paid cigarette sellers, signaling the government’s determination to curb illicit trade and bolster revenue collection efforts.

With these tax proposals and adjustments in place, the government under the IMF directive claims to address fiscal challenges, meet revenue targets, and ensure equitable distribution of the tax burden across various sectors of society.