Achieving the target set by the IMF will require a growth rate of around 30 per cent, sources said. Photo: File
Islamabad: The International Monetary Fund (IMF) has proposed a tax of Rs 575 billion in the federal budget for the next financial year.
A senior Federal Board Revenue official told the Express that in recent video link talks with the IMF, the IMF agreed to provide cautious relief to business sectors affected by Corona in the next fiscal year's federal budget. At the same time, however, progress has been made in implementing reforms under the terms of the ایف 6 billion Extended Fund Facility Program (EFF) with the IMF, which will continue in the next budget. As well as eliminating unnecessary tax breaks and bringing new sectors into the tax net. Effective implementation and management measures are proposed. Under these measures, additional revenue measures of Rs. 575 billion have been proposed in the next budget.
Sources said that Pakistan is in favor of keeping the tax collection target for the next financial year at Rs 4,700 to 4,800 billion while the IMF has proposed Rs 5,100 billion for which Pakistan has set tough targets in the next budget. There is a lot of pressure to keep up.
Sources said that a detailed briefing on budget formulation has been given in the meeting chaired by the Prime Minister a few days ago and besides political commitment and political support on budget targets, stakeholders will also be included in the consultation process as political Achieving goals is difficult without commitment and stakeholder cooperation. At the same time, effective implementation and management measures will be taken while important steps regarding audit are also under consideration. The sources further said that important amendments are also being made in the tax laws in the next budget while IT based modern automation systems are being introduced in the FBR.
According to sources, the IMF wants Rs 5,100 billion in tax collections for the next financial year and the loan program will not resume unless budget targets are set as per IMF conditions. The sources further said that the IMF demanded that the budget deficit be fixed at 0.4% of GDP while Rs 2700 billion be allocated for interest and debt repayment. According to sources, additional revenue of Rs 800 billion will have to be collected to achieve the target of Rs 5,100 billion at the request of the IMF. Of which new taxes of Rs 575 billion will have to be levied. Achieving this target will require a growth rate of about 30%, which is extremely difficult given the situation in Corona.
In the light of the guidelines given in the recent meeting chaired by the Prime Minister, the budget estimates will be finalized by the end of this month and submitted for approval by the Federal Cabinet in the first decade of next month. Will then be presented in Parliament.
Production sector and Pakistanis abroad are likely to get incentives
Sources said that the government wants to provide relief to the manufacturing sector in the budget to support the economy affected by Corona, for which proposals are being considered to revise the duty and tax rates on raw materials and sales tax rates. According to sources, a package is also under consideration for the promotion of remittances. Under this proposed package, holding tax on remittances will be abolished from July 1, 2020, debit cards and loyalty cards will be issued to remittance remittance Pakistanis while smartphone based concessions will be issued. The product will be introduced. In addition, a special app in the style of Vouch 365 will also be introduced. Under this program, remittances will be given to the children of overseas Pakistanis with 50% discount in OPF school and college fees as well as special quotas for them in housing schemes.