ISLAMABAD: Federal Board of Revenue has been expecting to collect additional Rs50b revenue through new tax measures to achieve the revised tax collection target of Rs2691 billion for fiscal year 2014-15.
The FBR will collect Rs5 billion revenues through imposition of Regulatory Duty (RD) on furnace oil, during the remaining period (Feb-June) of the current fiscal year. The WHT rate will be enhanced by 5 to 10 percent and the maximum rate will be fixed at 15 percent.
In line with the IMF’s agreement for completion of sixth review under $6.67 billion Extended Fund Facility (EFF), the FBR’s target was slashed down by Rs119 billion, bringing it down from Rs2810 billion to Rs2691 billion for end June 2015.
Now the practice of 90s was again revived with the introduction of mini budget during mid-half of financial year. The government has adopted the easy but controversial path for raising rates of different taxes through Statutory Regulatory Orders (SROs) instead of seeking approval of Parliament.
“In total, by raising GST from 17 to 27 percent on petroleum products, enhancing Withholding Tax (WHT) rates for non-filers, raising RD for 283 imported luxury items, increasing RD for furnace oil and metal scrap, the government will fetch Rs50 billion during the remaining period of the current fiscal year,” official sources confirmed to The News here on Tuesday.
FBR will collect Rs8 billion through raising the rate of RD on imported luxury items, furnace oil and on metal scrap. The major revenue spinner in this regard will be furnace oil, which is being used to generate electricity. The FBR high-ups were of the view that it would depend upon total quantity of imports of furnace oil in the remaining period of the current fiscal year.
By raising WHT for non-filers, the FBR is expecting Rs5-7 billion in the current fiscal year.The tax machinery would be expecting Rs35 billion by raising GST on POL products in two phases, from 17 percent to 27 percent. “Now the saturation point has come and there are dim chances for any further hike of GST for petroleum products from next month. The government has created a buffer to avoid sudden shock for consumers in case of abrupt increase in prices of petroleum products in international market,” they added.
When contacted FBR’s Senior Member Shahid Hussain Asad who is also official spokesman, said that the rate of WHT would be raised only for non-filers and it aimed at promoting documentation of the economy.
The ECC approved higher rates of WHT for importers and service providers who are non-filers of Income Tax returns, in order to encourage return filing and documentation in economy. The rates to be revised are in respect of non-filers only.
The rates of WHT shall remain unchanged for compliant taxpayers who file their returns regularly and their names appear on Active Taxpayers List. The distinction of filer and non-filer is being extended to these sectors to increase cost of doing business for non-filers and to encourage compliant-taxpayers.
Earlier, through Budget Act 2014-15, a distinction was created amongst filers and non-filers and higher rates of WHT were levied on non-filers to increase their cost of doing business for certain transactions including sale/purchase of immovable property, purchase of vehicles, issuance of dividend, cash withdrawals from banks etc.