With the current unsatisfactory figures of the tax collection, the Federal Board of Revenue (FBR) is preparing to come up with improved planning to achieve the desired targets. The proposed strategy is to expand the tax base and simplify the income tax structure to entertain the taxpayers.
There are still some sectors which do not contribute a single penny to the federal reserves as tax, and the aim of the board is to introduce fresh schedules in the Income Tax Ordinance 2001 via Finance Bill 2019 to counter this issue. By the suggested changes, simple tax structures would help the targeted sectors to comply with the laws and add their share of tax to the reserves.
The government is willing to facilitate educational institutions, jewelers, small-sized firms and builders by offering lower than standard income tax rates with an incentive to pay even less tax in terms of percentage by claiming fewer expenses in their income tax returns. The said sectors are likely to be discharged to pay the sales tax and federal excise duty while paying only one kind of tax. The board is also planning to increase the rate of individual income tax by 6%.
FBR is working on constructive reforms to meet the global standards, that is why these sectors have been targeted as they are more susceptible to understate their income. Recently FBR shared the current revenue collection deficit which is above Rs.400 billion and is likely to touch Rs.500 billion by the year-end.