The upcoming budget for the fiscal year 2024-25 is set to introduce new taxation measures amounting to a hefty Rs1.3 trillion. These measures are poised to impact various sectors, with a focus on enhancing revenue generation.
One significant aspect of the proposed measures involves heightened rates of withholding taxes on transactions conducted by non-filers.
Additionally, there will be adjustments in tax rates pertaining to the purchase and sale of immovable properties, vehicle registration, and revisions in income tax brackets specifically targeting the salaried class.
In response to economic dynamics, the government has tabled a proposal with the International Monetary Fund (IMF) to raise the income tax exemption threshold for the salaried class to Rs1 million. This move aims to alleviate the tax burden on this segment of taxpayers.
According to reports from Business Recorder, there is a push to streamline the tax structure for individuals by eliminating the salaried/non-salaried categorisation and reducing the number of tax rate slabs. This proposed adjustment seeks to simplify the tax regime for greater efficiency and ease of compliance.
Furthermore, policymakers are contemplating widening the gap between withholding tax rates for filers and non-filers of tax returns. This initiative includes plans to raise advance income tax on machinery imports by 1 percentage point, with an anticipated monthly revenue impact of Rs2 billion.
Other proposals on the table include increasing advance income tax on raw material imports by industrial entities by 0.5 per cent, expected to yield Rs2 billion monthly.
Similarly, there is a proposition to hike advance income tax on raw material imports by commercial importers by 1 per cent, projecting a monthly revenue gain of Rs1 billion.
Additionally, the budgetary deliberations include plans to augment withholding tax rates on supplies and services by 1 per cent each, with estimated monthly collections of Rs1 billion and Rs1.5 billion, respectively. There is also a proposal to raise withholding tax on contracts by 1 per cent, with an anticipated monthly revenue impact of Rs1.5 billion.
Lastly, the government is contemplating increasing withholding tax on cash withdrawals from banks by non-filers from 0.6 per cent to 0.9 per cent, aiming to incentivise tax compliance among this demographic.
These proposed taxation measures underscore the government’s commitment to bolster revenue streams and ensure fiscal sustainability in the face of evolving economic challenges.
