Pakistan may introduce mini budget to meet revenue shortfall

Pakistan may introduce a "mini-budget" and raise the withholding tax by one percentage point in October to meet a revenue shortfall, sources informed Nukta on Monday.

According to data released by the Federal Board of Revenue (FBR), it collected PKR 1,456 billion against a target of Rs1,554 billion during July and August. This amounts to a gap of PKR 98 billion.

As part of Pakistan's $7 billion loan program with the International Monetary Fund (IMF), if the FBR fails to meet the tax collection target by over PKR 100 billion in the first quarter of this fiscal year, the government would announce a "mini-budget" imposing additional taxes amounting to PKR 200 billion.

So, if there is a shortfall in the revenue collection for September, it's likely the government will go ahead with the increase in withholding tax.

According to the FBR's proposal, the withholding tax will be raised on imports, dividends, profit on debt, non-resident payments, supply as well as services, mobile phones and export items.

However, the sales tax will not be increased, the sources said.