An FBR officers said that there were unconfirmed reports that the government was likely to announce a “tax-free budget”.
They added that the final decision in this regard would be taken after Eid-ul-Fitr in consultation with the International Monetary Fund (IMF).
In addition, Finance Advisor Dr. Abdul Hafeez Sheikh has already termed next year’s budget as ‘Corona Budget‘.
However, it is up to the IMF to consider Pakistan’s proposal for a lower tax target for the year 2021. The IMF had proposed a tax target of Rs 51 trillion for next year. 30 times more than what was projected in FY20.
How much tax Relief given by IMF?
For this year, the IMF has lowered the FBR’s tax target from 48 trillion to 39 trillion due to the effects of the coronavirus on various businesses.
He added that achieving this benchmark also depends on improving business activity before and after Eid, and throughout the month of June.
Another senior tax officers said that IMF officials would meet with the Pakistani economic team to determine the direction of the next budget, whether it would be tax-free or some tax would be levied to achieve next year’s target.
The officers said the FBR had completed work on next year’s budget proposals and was now identifying irregularities to eliminate them. “We are also working to simplify and simplify tax laws for the convenience of taxpayers,” he added.
The officers said the FBR is also working with all stakeholders to identify tax issues.
“We will also consider tax breaks for some sectors in the next budget to help them revive their businesses,” he added.
He said that stakeholders have allowed zero rate tax for 5 export sectors, low rate of sales tax on local sales of textiles, textiles, exemption from the requirement of National Identity Card for traders and 17% sales tax rate. It was suggested to reduce it to 5%.
He said that all these demands belong to the stakeholders.
Informed about the preparation of the budget, tax officers said that the FBR would refrain from introducing new tax measures but would also defend the continuation of existing measures.
“This will help save our current tax for now and how it goes will be seen over the years,” he said.
Tax officers said the focus is now on doing business and facilitating taxpayers through information technology cooperation, and that the FBR will support any new tax proposals when the economy recovers.
However, a senior official said that the FBR could not eliminate most of the existing tax measures. “We need money to run the government machinery,” he said
He added that other measures, such as the issuance of banknotes, would increase inflationary pressures in the country.