ISLAMABAD: Prime Minister Shehbaz Sharif has turned down a significant proposal from the Federal Board of Revenue (FBR) to increase the withholding tax rate on cash withdrawals from banks from 0.6% to 0.9% in the upcoming 2024-25 budget. This measure was expected to generate an additional Rs20 billion in revenue for the fiscal year.
Additionally, the prime minister dismissed a proposal to tax pensions. Previously, he had already rejected two other major FBR suggestions: raising the standard sales tax rate from 18% to 19%, and imposing an 18% sales tax or “carbon tax” on petroleum products.
Sources informed Business Recorder that the FBR’s proposed one percent increase in the sales tax rate was anticipated to bring in an extra Rs40-50 billion in 2024-25. However, Prime Minister Sharif rejected this measure due to its potential inflationary impact on the public.
Similarly, the proposal to levy an 18% sales tax on POL products was also declined, as it would have an immediate inflationary effect on the general populace.
