The federal government plans to present the much-anticipated Rs18.5 trillion budget for the fiscal year 2024–25 on Wednesday (today) in an effort to obtain a new IMF bailout.
The ministry has finished its preparations for Finance Minister Muhammad Aurangzeb’s presentation of the budget to the National Assembly.
The budget was unveiled a day after the government declared that the current year’s 2.4% predicted economic growth would fall short of the 3.5% objective, despite 30% more revenues than the previous year and controlled fiscal and current account deficits.
In contrast to the revised predictions of Rs9.252 trillion for the previous financial year, the government is anticipated to set the Federal Board of Revenue’s (FBR) revenue collection target at Rs12.97 trillion for the upcoming fiscal year.
On the eve of the final budget for 2023–24, the parliament approved an original target of Rs9.415 trillion for tax collection, which the FBR had reduced downward. By increasing income and reducing uncontrolled spending, the tax collecting authority hopes to achieve fiscal consolidation by reducing the overall fiscal deficit from over 7.6% of GDP in the previous fiscal year to 6.5% of GDP in the upcoming budget.
Inland Revenue (IR) would undertake the greatest tax revenue mobilization efforts, focusing on income tax and GST, in order to generate additional revenues of Rs1.7 trillion and Rs1.3 trillion, respectively, through nominal growth, efficient enforcement, and extensive taxing policies.
The FBR projects that, of the Rs12.97 trillion annual tax collection target for the upcoming budget, Rs5.512 trillion will come from direct taxes, comprising Rs5.45 trillion in income tax, Rs4.919 trillion in sales tax, Rs0.948 trillion from federal excise duty, and Rs1.591 trillion from customs duty.
Regarding broadening the tax base, the lender located in Washington proposes providing access to comprehensive information on taxpayers, encompassing their socio-economic attributes and the taxes they are required to pay.
The FBR will need to use technology in order to handle massive amounts of data that must be handled, saved, shared, and examined. In addition, the government plans to reduce subsidies, state-owned enterprise costs, and pension reform expenses.
The government must raise both tax and nontax income in addition to funding the spending side of the forthcoming budget, which has an overall outlay of more than Rs18.5 trillion.