The Ministry of Finance high-ups informed the Senate Standing Committee on Finance and Revenues that the International Monetary Fund (IMF) has expressed serious objections regarding the budgetary framework for 2023-24.
The IMF has urged the government to increase both tax and non-tax revenues.
A senior Ministry of Finance official acknowledged the IMF’s dissatisfaction with the budgetary framework and stated that they would need to defend the proposal to raise the petroleum development levy to Rs869 billion for the next fiscal year, compared to the revised estimate of Rs542 billion for the current financial year.
However, the senators strongly opposed the Ministry of Finance’s intention to bypass parliamentary approval and empower the government to amend the Petroleum Levy Ordinance 1961 in order to raise the petroleum levy beyond Rs50 per litre. The government plans to increase the levy to Rs60 per litre in accordance with the consumption pattern in the country, as outlined in the Finance Bill 2023-24.
Additionally, the Senate panel rejected the proposed imposition of a 0.6 per cent advance tax on cash withdrawals exceeding the limit of Rs50,000 and suggested raising the tax rate to 1% while reducing the limit to Rs25,000 for non-filers. The panel also recommended changes to the tax rates for Super Tax, proposing a reduction in the maximum rate from 10 per cent to 8 per cent for the highest income bracket.
The Securities and Exchange Commission of Pakistan (SECP) expressed severe concerns about the increased risk of money laundering resulting from the raised monetary limit of foreign remittances from five million rupees to $100,000. SECP Commissioner Abdul Rehman Warraich informed the Senate committee that the Federal Board of Revenue (FBR) is unable to inquire about the source of investment or income under Section 111 of the Income Tax Ordinance 2001.
Similarly, the FBR cannot investigate tax evasion based on the source of remittance under the same section. It is worth noting that Section 111 taxes unexplained income except foreign remittances entering Pakistan.
