Potential Increase in Withholding Tax Rate If Quarterly Revenue Targets Are Missed

Islamabad: The federal government may raise the withholding tax rate by one percent if it fails to meet its revenue collection target for the current quarter (July to September). According to sources, Pakistan has informed the IMF that a mini-budget will be introduced if the target for the first quarter is not achieved, as there has been a revenue shortfall of 98 billion rupees in the first two months of the fiscal year.
If the Federal Board of Revenue (FBR) does not meet its tax collection goal for September, there is a likelihood of a one percent increase in withholding tax rates across various sectors, including imports, dividends, profit on debt, mobile phones, goods and services supplies, and payments to non-residents.
However, FBR officials remain optimistic, anticipating that the receipt of income tax returns in September, along with significant additional revenue, will not only help meet the revenue collection target for the month but also potentially exceed it.