Author: Shahnawaz Akhter

Karachi, November 6, 2024 – The Federal Board of Revenue (FBR) is under mounting pressure to clarify its recent changes to Karachi property valuation guidelines, which appear to remove previously allowed rebates on certain property classifications. This call for clarity stems from concerns over the sudden elimination of rebates that were available under prior notifications, causing uncertainty among property owners and potential investors.

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Karachi, November 6, 2024 – In a decisive move to bolster Pakistan’s tax base, the Federal Board of Revenue (FBR) has launched the registration of over 1.35 million potential taxpayers as part of its broadening of the tax base (BTB) initiative.

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Karachi, November 5, 2024 – The Federal Board of Revenue (FBR) announced a significant increase in sales tax revenue from electricity for fiscal year 2023-24, marking a year-on-year (YoY) surge of 63.4%. According to the FBR’s annual report, the sales tax collected from electricity rose to an impressive Rs. 364.66 billion, up from Rs. 223.22 billion in the preceding fiscal year, underscoring the substantial impact of rising power tariffs on tax revenues.

This impressive upswing in revenue collection has been pivotal in boosting the FBR’s overall Sales Tax Domestic (STD) revenues, which reached a total of Rs. 1,222.8 billion for FY2023-24. This represents a 22.6% increase from Rs. 997.8 billion collected in the previous fiscal year, adding Rs. 225.0 billion to the national treasury.

Key Sectors Driving Domestic Sales Tax Revenue

Sales tax revenue from domestic sectors continued to reflect robust growth, with fifteen major sectors collectively contributing 62.4% of the FBR’s domestic sales tax collections. Electrical energy emerged as the highest contributor, accounting for a notable 22.5% of the total, a leap driven primarily by increased power tariffs. This rise places electrical energy at the forefront of domestic sales tax revenue contributors.

Performance of Other Major Sectors

Among other top-performing sectors, sugar, cement, and cigarettes demonstrated robust growth in their sales tax contributions. Sugar, for instance, contributed Rs. 98.19 billion, showing a year-on-year increase of 28.5%. Cement, another essential sector, generated Rs. 66.61 billion, reflecting an impressive growth rate of 59.5%. Meanwhile, cigarettes, a consistently high-revenue product, saw an even stronger growth rate of 64.3%, with a collection of Rs. 60.66 billion.

Conversely, some sectors displayed declining contributions. POL (Petroleum, Oil, and Lubricants) products, traditionally one of the more substantial contributors to sales tax revenue, saw a contraction in their share. Revenue from POL products fell by 4.3%, with its contribution decreasing from 11.9% in FY2022-23 to 9.0% in FY2023-24. Similarly, natural gas showed a minor decline in revenue, with a collection of Rs. 46.5 billion, marking a 2.5% drop from the prior year.

Breakdown of Key Contributors to Sales Tax Revenue

Commodity/Item	FY2023-24 Collection (Rs. bn)	FY2022-23 Collection (Rs. bn)	Growth (%)	FY2023-24 Share (%)	FY2022-23 Share (%)
Electrical Energy	364.66	223.22	63.4	22.5	17.5
POL Products	145.35	151.86	-4.3	9.0	11.9
Sugar	98.19	76.43	28.5	6.1	6.0
Cement	66.62	41.76	59.5	4.1	3.3
Cigarettes	60.66	36.93	64.3	3.7	2.9
Cotton Yarn	57.12	46.75	22.2	3.5	3.7

The collective revenue from these top fifteen items totaled Rs. 1,010.95 billion in FY2023-24, reflecting a year-on-year growth of 31.4% and accounting for 62.4% of the total STD collection, an increase from the previous year’s share of 60.2%.

Implications of Rising Sales Tax Collection

The FBR’s surge in sales tax collection highlights the positive effect of strategic policy adjustments and tax reforms aimed at optimizing revenue from critical sectors. The significant growth in sales tax revenue from electricity can be attributed to recent adjustments in power tariffs, which, while impacting consumers, have also fueled tax revenue growth.

These figures underscore the government’s focus on strengthening domestic revenue sources amid fiscal challenges. The FBR’s performance in FY2023-24 not only reflects successful tax policy implementation but also points to a robust mechanism for supporting Pakistan’s economic needs through domestic revenue collection. As the FBR continues refining its strategies, the emphasis on sustainable and sector-specific tax policies may become increasingly central to fiscal planning and economic stability.

Karachi, November 5, 2024 – In its annual report released on Tuesday, the Federal Board of Revenue (FBR) unveiled a suite of pivotal income tax measures aimed at bolstering revenue collection for the fiscal year 2023-24. These reforms are part of a broader strategy to enhance tax compliance and broaden the tax base, reflecting the government’s commitment to improving fiscal health in a challenging economic landscape.

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Karachi, November 5, 2024 – The Federal Board of Revenue (FBR) has recorded a remarkable 36.5% increase in withholding tax (WHT) collection for the fiscal year 2023-24, according to its annual report released on Tuesday.

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