The government faces a possible deficit of up to 90 billion. In December Rs

• FBR expects Rs 70 billion in taxes from the banking sector by December 31.
• It is supposed to collect 6.009 billion. Rs by the end of the current month.
• The tax authority faces a deficit of 340 billion. In the first five months Rs.
  

ISLAMABAD: Amid measures aimed at boosting revenue generation and expanding the tax net, the federal government’s fiscal target for December 2024 is likely to face a shortfall of Rs 80-90 billion. The News reported on Tuesday.

With the announcement of the presidential order to impose 44% tax on banking sector profits, the Federal Board of Revenue (FBR) expects to collect Rs 70 billion by the due date of corporate sector returns.

Previously, the maximum rate in the banking sector was 55%, but after an agreement, the average tax rate has been reduced to 44% for the tax year 2025.

According to the agreement, the FBR now expects Rs 70 billion by December 31, 2024, from the banking sector, which will help the tax machinery reduce its deficit.

The tax authority had so far faced a deficit of Rs340 billion in the first five months (July-November) of the current fiscal as its collection stood at Rs4.295 billion against the desired target of Rs4.635 billion.

Now with the expected deficit of Rs 80-90 billion, the overall deficit to the FBR target may go up to Rs 420 or 430 billion in the first half (July-December) of the current fiscal.

As an indicative target agreed with the International Monetary Fund (IMF), the FBR is supposed to collect Rs 6,009 billion by the end of December and the tax mechanism needs to collect Rs 1,714 billion by the deadline.

According to the presidential decree issued on December 29, transactions that have passed and closed will not be affected.

Banks will pay 44% tax in tax year 2025, 43% in 2026 and 42% in 2027. For small companies, a tax rate of 20% will apply in tax year 2026. For all other companies, the normal rate of 29% would still apply.

Under the Ordinance, amendments to the Seventh Schedule, Ordinance XLIX of 2001 — the said Ordinance, in the Seventh Schedule, in rule 6C, in sub-rule (6A), (a) for the expression “2022 onwards”, the The scheme “2023” shall be substituted; and (b) the existing explanation appearing at the end shall be numbered as Explanation-1 and the following shall be added thereafter Explanation-2 and the proviso.