The Federal Board of Revenue (FBR) is currently facing a tax revenue shortfall of Rs33 billion for the ongoing financial year.
From July 2023 to May 2024, the FBR collected Rs8,126 billion, falling slightly short of the Rs8,159 billion target set for the first 11 months of this fiscal year, according to informed sources.
To meet the overall tax revenue target of Rs9,415 billion for the fiscal year, the FBR must now collect an additional Rs1,289 billion in June.
Despite this challenging task, there are positive indicators in the revenue collection trends. Compared to the same period in the previous fiscal year, there has been a significant 31% increase in tax revenue.
Moreover, the FBR exceeded its revenue target for May 2024 by Rs15 billion, collecting Rs760 billion against a target of Rs745 billion. This strong performance in May provides some optimism as the FBR approaches the final month of the fiscal year with a substantial collection target.
In the upcoming budget, the government has proposed new taxes on various sectors while abolishing certain exemptions. Despite reservations from the IMF, the proposal includes tax exemptions for certain sectors.
The proposal suggests increasing the annual income tax exemption limit by Rs300,000, potentially raising the threshold to Rs900,000 per year.
However, the proposed budget also includes measures to increase tax duties on imported goods and GST on food items. Notably, it suggests an 18% GST on baby milk, medical and surgical equipment, and imported packaged food. There are also plans to abolish withholding tax, remove sales tax exemptions, and raise customs duty rates. Additionally, the proposal recommends increasing the GST rate on solar panels, which could impact the renewable energy sector.
