The federal budget for the upcoming fiscal year 2024-25 will be presented tomorrow, featuring the largest tax target in the country’s history.
According to sources, the upcoming federal budget for the fiscal year 2024-25 will set the largest tax target in Pakistan’s history, proposing an increase of 3,440 billion rupees. The Federal Board of Revenue will be assigned a tax target of 12,900 billion rupees.
Sources from the FBR indicate that to achieve an additional revenue of 2,000 billion rupees in the next budget, new taxes will be introduced, and sales tax exemptions will be abolished. There is a proposal to impose additional sales tax on 7,000 items, potentially increasing the cost of essentials such as sugar, rice, pulses, milk, flour, tea, oil, ghee, and baby diapers.
Sources revealed that there is an initial proposal to impose a 6% sales tax on petroleum products, expected to generate approximately 600 billion rupees in revenue. Additionally, the forthcoming finance bill may include proposals to abolish all sales tax exemptions.
The upcoming budget is likely to impose sales tax on packaged milk. Eliminating sales tax exemptions could generate approximately 550 billion rupees in additional income, with a potential increase in the sales tax rate by another 1%.
The sales tax rate is expected to increase from 18% to 19%, potentially generating an additional 100 billion rupees in revenue.
Sources also mentioned that the 1% increase in sales tax could affect 7,000 different brands. There is a proposal to increase import duties for commercial importers by 1%, estimated to generate 50 billion rupees.
FBR sources state that the increase in the sales tax rate could lead to higher inflation in the next fiscal year. All tax proposals for the upcoming budget have been shared with the IMF. Various proposals are under consideration to generate an additional 700 billion rupees.
Sources indicate that raising the sales tax on sugar from 18% to 19% could make sugar 5 rupees more expensive per kilogram. A 1% increase in sales tax could also make ghee 5 to 7 rupees per kilogram more expensive, edible oil 5 to 7 rupees more expensive per liter, soap 2 to 5 rupees more expensive, and shampoo 15 to 20 rupees more expensive.
Similarly, a 1% increase in sales tax could raise the price of toothpaste by 5 to 7 rupees, toothbrushes by 5 to 7 rupees, and polish by 3 to 5 rupees.
After the sales tax increase to 19%, the price of soft drinks could rise by 5 to 7 rupees per liter, syrups by 5 to 7 rupees, carbonated drinks by 5 to 7 rupees, and powdered drinks by 5 to 7 rupees per packet. Bathroom cleaning liquid bottles could become 10 to 15 rupees more expensive.
A 1% sales tax increase could make yogurt 7 to 10 rupees more expensive, powdered milk 20 to 30 rupees more expensive per packet, and ‘fat milk’ 5 to 7 rupees more expensive per liter.
Additionally, prices for electronics, makeup, hair dye products, clothing, various branded apparel, and leather products are expected to rise.
Dozens of spice items, as well as various brands of tea, coffee, baking items, noodles, spaghetti, pasta products, children’s breakfast cereals, oatmeal, jam, jelly, marmalade, tissue paper, and baby diapers, could also become more expensive.
Sources suggest that the 1% tax increase could make hundreds of kitchen items more expensive, as well as lotions, creams, artificial jewelry, perfumes, body sprays, cameras, smartwatches, and watches.
