Business
PM orders review of high tax rates | The Express Tribune
Prime Minister Shehbaz Sharif. Photo: File
ISLAMABAD:
Prime Minister Shehbaz Sharif has instructed a review of the possibility of reducing higher rates of income and sales tax to stop capital and human flight, as despite putting the maximum burden, the government suffered a Rs276 billion revenue shortfall in the first four months.
In what appears to be a highly ambitious plan, which is still in its infancy and will undergo multiple rounds of scrutiny, the government can inject Rs1.1 trillion into the economy and households by slashing the unaffordable rates of corporate, individual and salaried class income tax and sales tax.
Government sources said that the Federal Board of Revenue (FBR) was preparing different models to bring taxes down to regional levels, so companies stay back in Pakistan and individuals too are not overtaxed.
The FBR’s initial working suggested a reduction in corporate income tax from 29% to 25%, the maximum individual rate from 45% to 25%, abolishing 10% super tax, ending 15% inter-corporate dividend tax and cutting sales tax from 18% to 15%.
Sources said that the estimated annual revenue impact of the move could be Rs1.1 trillion, with the maximum impact of over Rs600 billion on account of reducing the standard sales tax rate.
However, it is highly unlikely that the International Monetary Fund (IMF) may endorse such a plan, which will leave the government with the option of rolling out the plan after the end of the bailout package, according to the sources.
The IMF too appears concerned about the multinational companies leaving Pakistan, which is contrary to the IMF’s goal of attracting foreign investment by ensuring an internationally competitive environment. Individuals are also looking for overseas jobs.
Sources said that taxes have reached such a suffocating level that on the one hand the companies end up paying about 60% of net income in taxes and on the other hand they are forced to pay advance income tax to the FBR to help it achieve targets.
The situation was the worst in the case of salaried class. According to the FBR, the “withholding tax collection from salaries registered the highest increase of Rs214.2 billion (55% growth) in the last fiscal year, primarily due to a decrease in the number of income tax slabs and an increase in the corresponding tax rates in each slab”.
As a result, the salaried class paid a record Rs605.6 billion in the last fiscal year, the second highest after contract payments. Ironically, in contract payments, there are also salaried class-related payments.
Revenue performance
The FBR’s statistics showed that against the target of Rs4.1 trillion, the four-month (Jul-Oct) collection reached Rs3.833 trillion, widening the shortfall to Rs276 billion. It came despite the imposition of new taxes in the budget, the increase in tax rates and some enforcement measures. The Jul-Oct collection was only Rs396 billion, or 11.5%, more than the last fiscal year.
Tax authorities said that revenues suffered badly because of a slowing economy and the situation was further complicated by curtailing the local gas production for the sake of consuming surplus imported LNG. They said that the carbon levy on furnace oil also impacted its use, which in turn affected the sales tax collection.
After the FBR sustained a Rs197 billion shortfall in the first quarter, the IMF during the recent review talks agreed to cut the annual target of Rs14.13 trillion by the same amount. However, the FBR has not adjusted the monthly targets.
The government has assured the IMF that it was ready to take contingency measures to the tune of Rs200 billion annually in January, if the first-half collection remained below the target or expenditures exceeded the agreed limit.
The FBR collected Rs1.8 trillion worth of income tax in four months, missing the target by Rs103 billion. However, the collection was 11.5%, or Rs185 billion, higher than last year.
Sales tax collection amounted to Rs1.36 trillion, falling behind the target by Rs182 billion. It was still Rs123 billion higher than last year.
Federal excise duty collection stood at Rs259 billion, slightly lower than the four-month target. Customs duty collection reached Rs419 billion, which was Rs12 billion more than the target due to increased imports.
Tax authorities said that due to the duty reduction in budget, many items slipped to a zero levy, which led to a 42% increase in their imports. Pakistan is also facing the dumping of foreign goods, which is harming local manufacturing.
PM Sharif on October 25 established a working group on customs, trade, tariffs and dumping, which will be headed by a leading businessman. The working group has held its first meeting this week and will present its findings to the government.
The FBR missed the monthly tax collection target by Rs71 billion as it got Rs950 billion in October. The growth in monthly collection was only 8%, which was near the nominal GDP growth.
Tax returns
The FBR on Friday did not further extend the date for filing annual tax returns after the PM stopped it from giving blanket extension in the filing deadline. However, the taxpayers facing genuine hardships may approach their respective field formations through the FBR’s IRIS system for an extension in filing returns.
The FBR recorded a significant increase in income tax return filings for tax year 2025, marking a new milestone in voluntary compliance and taxpayer awareness, it claimed.
As of October 31, 2025, a total of 5.9 million tax returns had been filed, compared to five million returns in the same period of last year, showing an increase of 17.6%.
However, compared to tax year 2024, the number of income tax return filers decreased by 24.3% or 1.9 million. In the last tax year, 7.8 million individuals and companies had filed returns. The filing will continue in the coming months as the inactive taxpayer status attracts penalties.
The taxpayers paid Rs130 billion along with the returns, which were almost at the last year’s level.
NEW DELHI: The impact of pre-GST revamp pause in sale of several products, such as automobiles and white goods, and the lower rates rolled out from Sept 22 slowed down the growth in gross GST receipts but the mop up remained close to the Rs 2 lakh crore-level, data for October showed. Official numbers released on Saturday showed GST collections in Oct for transactions in Sept totalled 1.96 lakh crore, an increase of 4.6% compared to Rs 1.87 lakh crore in October last year.This was the slowest pace of increase this fiscal. In Aug and Sept, GST collection rose 6.5% to Rs 1.86 lakh crore and at 9.1% to Rs 1.89 lakh crore. Gross domestic revenue grew 2% to Rs 1.45 lakh crore, while tax from imports rose nearly 13% to Rs 50,884 crore in October. The data showed GST refunds rose 39.6% year-on-year in Oct to Rs 26,934 crore.In Sept, GST Council had unveiled reforms to GST rate structure, which led to a sharp reduction in rates on a raft of items, bringing relief to consumers, and the latest data showed apprehensions of decline in collections have been negated.The rate cuts, effective September 22, have revived consumption demand, and experts said GST revenues for Nov are likely to show a sharp rebound.“Despite massive rate cuts effective from September 22, a slight increase in domestic GST collection is very encouraging and shows that demand is steadily increasing,” said Pratik Jain, Partner at consulting firm Price Waterhouse & Co LLP.“Consistent increase in GST refunds (domestic as well as exports) shows confidence of tax administration that GST collections would show positive trend in future as well. Next month’s data would have the full impact of GST cuts and would be keenly awaited,” added Jain.On the back of a fillip provided by a reduction in GST on 375 items, consumers had flocked to stores and car dealerships resulting in highest Navratri sales in over a decade, government officials had earlier said, citing industry data.“The GST collections, while aligning with immediate expectations, reflect a muted momentum in Sept primarily due to rate rationalisation effect in the majority part of the Sept month and the deferred consumer spending ahead of the upcoming festive season. This anticipated lag is likely to be compensated by more robust numbers in the next month, driven by seasonal buoyancy,” said Saurabh Agarwal, Tax Partner at EY India. “The impressive, high percentage growth in collections from states and UTs like Arunachal Pradesh, Nagaland, Lakshadweep and Ladakh is a tangible indicator of holistic economic development across India,” he said.
New Delhi: Home services provider Urban Company on Saturday announced a net loss of Rs 59.3 crore in Q2FY26, a significant drop from a profit of Rs 6.9 crore in the previous quarter. The loss was attributed to heavy upfront investments in its new daily-housekeeping vertical, Insta Help, which overshadowed strong revenue growth in its core services and products businesses, according to regulatory filings by the Gurugram-based firm.
The company posted a loss of Rs 1.82 crore in the July-September quarter last year, the company said. While revenue from operations increased 37 per cent year-on-year to Rs 380 crore, the total expenses rose to Rs 462 crore from Rs 384 crore in Q1. This resulted in adjusted EBITDA turning negative at Rs 35 crore, compared with a profit of Rs 21 crore in Q1.
Insta Help reported an EBITDA loss of Rs 44 crore, and excluding this segment, Urban Company achieved an adjusted EBITDA profit of Rs 10 crore, accounting for 0.9 per cent of net transaction value (NTV), the company noted.
“Early indicators for Insta Help are encouraging, with strong consumer adoption and repeat usage,” the company said in its shareholder letter. It added that it believed the segment holds “significant long-term opportunity and believes these investments are important to sustaining market leadership.”
The company expects its adjusted EBITDA losses to continue in the near term due to further investments in the Insta Help vertical, despite its core India and international businesses remaining profitable and cash-generating.
The company’s smart home products vertical, Native, which sells water purifiers and electronic door locks, recorded revenue of Rs 75 crore, up 179 per cent YoY, while losses narrowed to 9 per cent of NTV from 30 per cent in the previous year.
The home services provider closed the quarter with Rs 2,136 crore in cash and equivalents, up from Rs 1,664 crore in the previous quarter, mainly due to proceeds from its recent IPO.
New Delhi: Amazon CEO Andy Jassy has opened up about the company’s recent layoffs, which affected around 14,000 employees. Contrary to popular belief, he said the decision wasn’t about cutting costs or the rise of artificial intelligence. Instead, Jassy pointed to a deeper reason behind the move — company culture. “The announcement that we made a few days ago was not really financially driven, and it’s not even really AI-driven, not right now at least,” he said, as quoted by Business Insider. “It really — it’s culture.”
A Cultural Reset at Amazon
Andy Jassy’s comments reflect Amazon’s ongoing push to reshape its internal culture. As reported by Business Insider, he has been focused on raising performance standards, tightening discipline, and cutting down on unnecessary bureaucracy to make the company more efficient and agile.
During the earnings call, Jassy acknowledged that Amazon’s rapid expansion over the years had added “a lot more layers,” which ended up slowing down how decisions are made. He emphasised that the company now needs to “operate leaner and move faster,” particularly as artificial intelligence continues to reshape industries worldwide.
“Sometimes, without realizing it, you can weaken the ownership of the people that you have who are doing the actual work,” Jassy said. “And it can lead to slowing you down.” In a blog post on October 28, Amazon’s senior vice president of people experience and technology, Beth Galetti, also confirmed that the company is “making organizational changes across Amazon that will impact some of our teammates.”
“While this will include reducing in some areas and hiring in others, it will mean an overall reduction in our corporate workforce of approximately 14,000 roles,” she said. This marks Amazon’s largest round of layoffs since 2022, when about 27,000 employees were let go. Interestingly, Jassy’s recent comments contrast with what other Amazon executives have previously said about the reasons behind the job cuts.
The decision also reflects a broader trend across Big Tech. Giants like Google and Microsoft are undergoing what many call the “Great Flattening” — cutting down layers of management to speed up decision-making and eliminate unnecessary bureaucracy.
Jays feel sting of defeat as title slips from grasp
Sarah Ferguson looses everything after Andrew’s plight: report
5 iconic moments from Dodgers-Blue Jays’ Game 7 thriller
-
Politics1 week agoTrump slams ‘dirty’ Canada despite withdrawal of Reagan ad
-
Tech1 week agoDefect passivation strategy sets new performance benchmark for Sb₂S₃ solar cells
-
Sports1 week agoAlleged mob ties in NBA scandal recall La Cosa Nostra’s long shadow over sports
-
Business1 week ago47.7% of Mutual Fund Assets Now Invested Directly, ICRA Analytics Says
-
Tech1 week agoHow Data Centers Actually Work
-
Tech1 week agoMicrosoft removing support for Windows 10 could increase e-waste, cybersecurity threats
-
Tech4 days agoAI chatbots are becoming everyday tools for mundane tasks, use data shows
-
Sports1 week agoJays’ Bichette, Dodgers’ Kershaw on WS rosters