ISLAMABAD: Federal Board of Revenue (FBR) has been given go-ahead by Prime Minister Nawaz Sharif to impose 7.5% withholding tax on monthly electricity consumption of Rs50,000.
According to the official sources in Finance Ministry, the tax will also be imposed on individuals flying first or business class to international destinations.
The prime minister grated the FBR request, while chairing a meeting on taxation proposals for the fiscal year 2015-16, said an official handout. FBR chairman Tariq Bajwa said that the revenue authority has been assigned a Rs3.1 trillion-tax target for fiscal 2016. The government has also decided to withdraw Rs130 billion worth of Statutory Regulatory Orders (SROs) besides levying additional taxes of around Rs100 billion in the new budget.
Withholding taxes are the government’s way of forcing people to pay an income tax and encouraging people to file their tax returns. Those who file their tax returns each year can claim those withholding taxes as a credit against their income tax liabilities. If they paid more than they owed, they are entitled to a refund from the government. Withholding taxes already exist on post-paid cellphone bills, phone bills and other utility bills, as well as on large withdrawals from bank accounts.
