FBR sets Tax Collection target of Rs7,470 billion as the tax collection target of the Federal Board of Revenue (FBR) for the economical year of 2022-23 has been revised with an addition of Rs466 billion.
The government, to collect the amount, took some extreme measures by increasing the tax rate on high-income earners to fetch Rs120 billion for poverty alleviation and Rs35 billion by raising tax rates for the salaried class.
FBR sets Tax Collection target of Rs7,470 billion as the government slapped a 10% super tax on 13 high-earning sectors with a income impact of Rs80 billion for the next financial year 2022-23.
The exchange rate devaluation will also help the FBR to collect more taxes at the import stage in the budget for 2022-23, so with help of all these taxation measures, the tax collection target will be increased up to Rs7,470 billion.
On Personal Income Tax (PIT), the government raised a tax amount of Rs80 billion as first the government abolished tax relief of Rs47 billion and then raised a tax amount of Rs35 billion, so the FBR was going to collect Rs235 billion from salaried class in the next budget against a collection of Rs200 billion in the outgoing fiscal year.
The PTI-led government had made a commitment with the IMF for raising the tax amount of Rs335 billion through an increased rate of slabs for the salaried class but the PDM-led coalition government convinced the IMF for collecting Rs100 billion less than agreed by the previous PTI-led government with the IMF.
For the salaried class, the government proposed a tax rate of 2.5% for income brackets of Rs50,000 to Rs100,000. For income earners from Rs100,000 to Rs300,000 on monthly basis, the proposed tax rate jacked up to 12.5%.
Where the taxable income exceeds Rs3,600,000 but does not exceed Rs6,000,000, the FBR proposed to jack up the tax rate from 17.5% to 20%. Where the taxable income exceeds Rs6,000,000 but does not exceed Rs12,000,000, the FBR tax rate is proposed to be increased from 22.5% to 25%.
Where the taxable income exceeds Rs12,000,000, the FBR will charge a tax amount of Rs2,004,000 plus 32.5% of the amount exceeding Rs12,000,000 on a per annum basis. For the above income, the FBR proposed a tax rate of 35%.
The Ministry of Finance high-ups disclosed to The News on Friday that all IMF’s demands on the fiscal front were almost fulfilled and now it was expected that the Fund staff would share a draft of the Memorandum of Financial and Economic Policies (MEFP) next week on Monday.
The IMF and the Ministry of Finance as well as the State Bank of Pakistan are holding parleys continuously. Finance Minister Miftah Ismail also chaired a meeting related to the government’s strategy for hiking power tariffs.
The Fund has objected to the government’s estimates of allocating Rs225 billion for Price Differential Claims (PDCs) for the next budget as the IMF assessed that it might escalate to over Rs350 to Rs450 billion.
The fuel price adjustment for May 2022 has been estimated at Rs8 per unit while it may go up further for June 2022. The increased prices of RLNG in the international market have increased woes of cash bleeding power sector as the price of furnace oil and coal also went up, thus, increasing generation cost manifold.
