Islamabad: FBR has given 3 suggestions to the government to increase the income tax to increase the tax revenue.
According to the FBR proposal, the government is considering imposing 2.5 percent income tax on the entire trading chain from manufacturers to retailers to increase tax revenue, if Prime Minister Shehbaz Sharif yields to pressure from relevant stakeholders and the National Assembly. If this tax is approved, then the government will be able to collect billions of rupees in tax.
Sources say the income tax will be levied on non-filers, the wholesale and retail sectors make up a fifth of the economy, but only pay 24 billion rupees (0.001 per cent) of the tax, according to the RRMC proposal. If 1 percent tax is imposed on all wholesalers, distributors and retailers, the government can collect at least 400 billion rupees.
However, FBR has not included imports in its proposal, but if imports are included, the government can collect Rs 1,000 billion through 2.5% income tax. Besides, 1 percent increase in withholding tax on all types of imports has also been proposed.
The FBR has also proposed to increase income tax on contractors, professional service providers and sportsmen. During the current financial year, professionals and contractors have collected the highest amount of tax, while imports have been at the third position. The salaried class has been the fourth highest tax payer.
It should be noted that the government is considering setting the tax target for FBR at 13 thousand billion rupees with a 40 percent increase, for which additional taxes of 2 thousand billion rupees will be required, currently 1 to 4 percent on imports. Taxes are levied up to, which will increase from 2 to 5 percent if the FBR proposal is implemented, while non-filers will pay double taxes compared to filers.
During the current fiscal year, the government has collected Rs 349 billion in taxes from imports, which is 31 percent (Rs 82 billion) more, making it the third largest sector in terms of income tax revenue.
