The federal budget is scheduled to be announced on June 11, but Revenue Division sources say top tax officials are still debating key revenue measures.
Contrary to the claims of the government's economic team, the forthcoming budget will be tax-free, in fact the budget is expected to impose a substantial burden of direct and indirect taxes on the common man.
The Federal Board of Revenue (FBR) has been entrusted with the task of collecting additional revenue of over Rs. 10 trillion in the budget for the current financial year 2012-13.
This additional revenue will be generated through growth in the economy and inflation, including the elimination of sales tax, income tax, subsidy tax cuts.
It is expected that the revenue collection for the current financial year could be around Rs. 47 trillion.
The International Monetary Fund (IMF) is asking Islamabad to propose a revenue collection target of over Rs. 58 trillion for the financial year 2022.
The IMF wants Islamabad to withdraw as much concessions as possible, rather than relying on revenue collection through administrative measures.
Negotiations with the IMF on revenue are ongoing and an agreement is likely to be reached on most tax issues.
A cabinet meeting chaired by Prime Minister Imran Khan will give final approval to the revenue proposals, which are politically sensitive in some respects.
However, proposals to further reduce customs duties for raw materials, semi-finished products, especially value-added textile sector, are also on the agenda.
As part of the facility, the government is considering reducing rates from the country's textile industry, especially textiles.
Similarly, the government may reduce duty on raw materials for the steel sector, which would be an unprecedented package for the value-added sector.
The three broader pillars on which the budget is based include no new taxes, expansion of the tax base and bringing e-commerce under the tax net.
The Rs 140 billion corporate rebate introduced by the Presidential Ordinance will now be made part of the Finance Bill 2021.
In the case of income tax, there has been strong resistance for salaried and non-salaried persons to make any change in the slab or tax rate. A few other income tax exemptions from the second schedule are also under consideration.
It is proposed to document the sales of 60,000 to 70,000 large retailers under the Point of Sales.
The FBR has also come up with a number of suggestions for documenting debit or credit card payments.
At the same time, measures have been proposed to effectively tax e-commerce as a new sector.
Pakistan has agreed with the IMF that there will be no change in tax rates in areas where inflation is expected to rise.
Under this parameter, the government will not withdraw discounts on food, health and education items in the next budget.
