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Govt mulling over surging tax on petroleum products

Govt mulling over surging tax on petroleum products

ISLAMABAD: The government is planning increase taxes on petroleum products and imported goods and withdraw of concessions to meet revenue collection target.

Sources said the possible steps to increase revenue collection include increases in sales tax on petroleum products, federal excise duty on beverages, cigarettes, telecom services and local/imported vehicles, withholding tax on import of finished goods and higher sales tax rates on domestic sales by export-oriented segment.

Tax exemptions and concessions in lieu of income and sales taxes and federal excise duty are likely to be abolished to improve horizontal and vertical equity in the tax system, they added.

The government set a tax collection target of Rs4.398 trillion for the Federal Board of Revenue (FBR) for the current fiscal year. The FBR envisaged tax collection of Rs1.479 trillion in the July-November period, while the revenue shortfall stood at Rs111 billion; although the tax collection grew 6.7 percent year-on-year during the period.

“The government may increase sales tax on petroleum products and revise up rates for non-corporate taxpayers that were drastically reduced in the Finance Act 2018 to offset the revenue shortfall during the first five months,” a source said.

The government already raised sales tax rates for December after reduction of international oil prices. The new sales tax rates are eight percent on petrol, 13 percent on high speed diesel, two percent on kerosene and 0.5 percent on light diesel oil.