The Federal Board of Revenue (FBR) has prepared several proposals for the upcoming fiscal year budget, including plans to increase withholding taxes on transactions conducted through online platforms, according to reports.
These proposals will be presented to the International Monetary Fund (IMF) team arriving tomorrow for negotiations to finalize next year’s budget. Among the key recommendations is an increase in the current 0.25 percent withholding tax on transactions through popular online marketplaces such as Daraz, OLX, Zameen, and PakWheels, aimed at boosting tax collections and expanding the tax base in line with IMF requirements.
The proposed changes are part of a comprehensive fiscal overhaul expected to be presented to Prime Minister Shehbaz Sharif on May 15, ahead of the budget announcement scheduled for June 2.
In a significant move to restore investor confidence, the FBR has recommended gradually withdrawing the 10 percent super tax on large corporations, which has pushed effective corporate tax rates in sectors like banking, cement, oil, and tobacco to as high as 39 percent. Officials believe this reversal could unlock over Rs. 200 billion currently tied up in legal disputes.
For salaried individuals, the government is considering raising the monthly tax-free income threshold from Rs. 50,000 to Rs. 80,000, effectively exempting annual incomes up to Rs. 960,000. Additionally, the 10 percent surcharge currently imposed on high-net-worth individuals earning over Rs. 10 million monthly may be eliminated.
However, these relief measures come with certain trade-offs. A controversial proposal to impose a 5 percent income tax on pensioners is under consideration, raising concerns among retired public servants and union groups.
The government is also exploring tax relief for manufacturers and the real estate sector, including the removal of withholding taxes on raw material imports and reductions in property transaction taxes. While imported vehicles may receive duty relief, locally assembled cars with engines exceeding 1300cc could face higher taxation.
Despite these wide-ranging proposals, officials acknowledge that achieving the Rs. 12.3 trillion revenue target remains challenging without implementing aggressive reforms.
