The Federal Board of Revenue (FBR) has proposed to set a tax target of Rs5829 billion for the financial year 2021-22.
A target of Rs2182bn has been set to collect via income tax collections. Sales tax collection target is set at Rs2506bn, according to the document.
Federal Excise Duty (FED) collection target of Rs356bn has been proposed. It has been decided to set a target of Rs785bn for customs duties. The growth target for income tax collections in the next budget will be 22 per cent.
In the financial year 2021-22, the growth target for sales tax collections will be 30pc. The growth target for FED will be 29pc, the FBR document said. Furthermore, a growth target of 12.1pc in terms of customs duty has been set.
Furthermore, it is suggested to the government to abolish income tax exemptions of more than Rs20bn. It includes a proposal to abolish income tax exemption on medical allowance to a salaried class, they added.
There are also recommendations to abolish tax exemption on profits of corporate agricultural income and income tax exemption on business in the erstwhile Tribal Areas.
Previously, businesses in the Tribal Areas were given a tax exemption of Rs4bn per annum, sources said.
The poor will be burdened as it is also recommended to abolish income tax exemption for social security institutions, the sources maintained.
Moreover, the LNG (liquefied natural gas) will become dearer as the government is suggested to do away with income tax exemption given to LNG terminals and operators.
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It may be recalled that in March, the Federal Board of Revenue had submitted a bill to the National Assembly secretariat proposing a string of amendments to withdraw around 36 tax exemptions and streamline other corporate tax exemptions, which were to come into effect from July 1, 2021.
WITHHOLDING TAX: A day earlier, the federal government was planning to ease the masses as it was considering to scrap two dozen withholding taxes and different proposals were under discussion.
At present, there are 40 withholding taxes.
One of the main suggestions is to abolish withholding tax and Federal Excise Duty (FED) on credit cards for a period of three to five years.
This step, if taken, will facilitate the revival of the digital economy in the country.
In the upcoming budget, the withholding tax on cash withdrawal from banks, contracts, supplies and salaries will also be abolished.
Another proposal which is being considered is to reduce the salary tax rates. Furthermore, FBR is considering proposals to introduce various offers to taxpayers to settle cases.
This will be done by paying 20 per cent to 50 per cent of total amount involved at different stages of appeals.
The FBR has realised that it is collecting a negligible amount against some withholding taxes. It has found that around 7 to 10 withholding taxes contributed to almost 85 per cent of the collections under this head out of the total number of taxes standing at over 40.
