The Federal Board of Revenue (FBR) is likely to raise the rate on 31 different kinds of withholding taxes by one percent starting next month if the revenue shortfall continues in September 2024.

In this regard, the FBR has drafted a mini-budget proposal on withholding taxes (WHTs).

According to the details, currently, 31 types of withholding taxes apply to various financial transactions. The FBR has proposed to increase withholding tax rates by one percent if the FBR continues to face a shortfall in tax collection during the last month of the first quarter (July-September) of 2024-25.

The proposal would be implemented through a supplementary finance bill if the FBR fails to meet the target for September 2024. Now, it depends on the tax collectors to meet the target for September 2024 or further increase withholding tax rates in October 2024.

The standard rate of sales tax may not be increased, but the withholding tax rates are proposed to be raised by one percent in case of a persistent revenue shortfall in tax collection, sources maintained.

The FBR has suffered a significant shortfall of Rs 98 billion in tax collection during the first two months of 2024-25, as net collection stood at Rs1,456 billion against the assigned target of Rs. 1,554 billion during this period.