Pakistan is set to Announce a Mini Budget to Generate about Rs200 Billion Additional Revenue to meet IMF Condition.

The mini budget will be placed before and approved by parliament ahead of IMF final talks on 16.02.2023.

The government is taking harsh taxation measures on the demand of the IMF to general more revenue for lower the fiscal deficit.

Sources in FBR on 14.02.2023, said that the changes may be applicable from 15.02.2023, after cabinet approval. They said that through the new amendments the government had aimed to generate another Rs.200 billion.

The sources highlighted the major changes in the tax laws including

a) Imposition of 0.6 per cent withholding tax on non-filers for making banking transactions.

b) Additional Tax on the foreign exchange income of the banks.

c) The most important change is enhancing sales tax at 17 per cent to 18 per cent.

d)  Furthermore, enhancing fixed federal excise duty on motor vehicles is also under consideration.

e) The sources said that the enhancing excise duty on soft drinks is also under consideration.

f) The duty enhancement on cigarettes is also likely.

g) Imposition of a flood levy is also on the cards. This levy may be imposed on imports at 3 to 10 per cent. However, exports would be exempted from the flood levy.

New taxes to be unveiled today

The government has proposed to increase FED on international air travel in club, business, and first class at 20 % of the gross amount or Rs.50,000 per ticket whichever is higher issued on or after the date of enactment of this bill.

It has also proposed to increase the rate of sales tax on imported mobile phones valuing $201 to $500 at 25% of ad valorem.

A 10% advance adjustable income tax will be collected from persons on Active Taxpayers List and 20 % for non-ATL of the amount paid for social functions and gatherings.

It has proposed to impose an advance adjustable income tax of 10% on sale consideration on off-market disposal of shares.

The FED on cement has been increased from Rs 1.50 per kg to Rs 2 per kg.

These measures are taken to generate Rs55 billion more, taking the total size of the mini-budget to Rs170 billion.

The Federal Board of Revenue (FBR) notified the FED increase on expensive brands from Rs6.5 per cigarette to Rs16.5 – an increase of 153%. For less expensive brands, per stick increase is from Rs2.55 to Rs5.05 – an increase of 98%.