The government has identified a number of high-profit sectors for an increase in tax rates in the upcoming budget. Through the Finance Bill 2022-23, they include the banking sector, edible oil, iron/steel, beverages, and tobacco sector.
According to sources, the Federal Board of Revenue (FBR) has targeted high-profit sectors for tax increases in the next fiscal budget.
At the same time, the revenue contribution from these sectors is far less than the actual potential. Direct taxation would be increased relative to indirect taxation under the new policy directive of the upcoming budget.
Profitable sectors are subject to taxation even if they do not contribute to the actual tax liability to be paid.
The next budget’s tax policy is to tax the profits and earnings of the banking, edible oil, steel, tobacco, and beverages sectors, but the tax burden will not be passed on to consumers.
According to sources, a proposal is being considered to raise the rate of Super Tax on banks, based on the fact that the potential tax revenue from the banking sector is much higher than the profits earned by the banks.
According to sources, budget makers are seriously considering raising taxes on the lucrative edible oil sector. The ghee and cooking oil industries are not paying taxes in proportion to their actual potential and should be taxed.
However, taxation would be implemented in such a way as to tax their profits without increasing the prices of finished goods or commodities. The advance income tax is expected to be levied at the time of importation, as part of the Federal Excise Duty.
Similarly, the steel industry earns huge profits while paying far fewer taxes than it should. Steel product prices have risen significantly over the last 1-2 years. The steel industry’s massive profits and earnings must be taxed through direct taxation measures.
To read our blog on “Import taxes may be raised by the government,” click here.
