No increase in GST expected in Budget

May 23, 2023

The government has finalized its decision to maintain the standard rate of General Sales Tax (GST) at 18 percent for the upcoming 2023-24 budget. Instead of reducing the GST rate, the government intends to increase withholding taxes in applicable cases to boost tax revenues. The government is also considering amendments to bring retailers into the tax net, although similar attempts in the past have been unsuccessful.

Various proposals are being considered to potentially impose a Minimum Asset Tax (MAT) on both movable and immovable assets. However, the authorities at the Federal Board of Revenue (FBR) have been advised to ensure the proposed taxation measures are constitutionally sound to avoid legal disputes. Additionally, the government is exploring options to document the property sector as part of its ambitious target to collect tax revenues ranging from Rs 9 trillion to Rs 9.2 trillion for the upcoming budget.

According to an official statement from the Finance Ministry, a meeting was chaired by Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar to discuss budgetary proposals presented by the FBR at the Finance Division. Attendees included Minister for States for Finance and Revenue Dr Ayesha Ghous Pasha, Special Assistant to the Prime Minister (SAPM) on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Chairman RRMC Ashfaq Yousuf Tola, Secretary Finance, Chairman FBR, and other senior officers from the Finance Division and FBR.

During the meeting, various taxation proposals were discussed, including a measure to tax exporters who retain foreign exchange in anticipation of rupee devaluation against other international currencies, thereby earning a gain on their foreign exchange. It was suggested that the State Bank of Pakistan should be entrusted with the task of collecting this levy since the FBR does not have access to the necessary details.