Prime Minister Nawaz Sharif has approved revenue measures and administrative/enforcement actions of Rs 230-240 billion for fiscal year 2014-15, including withdrawal of tax exemptions granted through statutory regulatory orders (SROs), doubling of withholding taxes on non-taxpayers, restoration of excise duty on several items and rationalisation of tax rates.

Sources said that Prime Minister has asked FBR to withdraw hundreds of SROs and notifications pertaining to tax exemptions and concessions and additional revenues measures of Rs 230-240 billion in the FY 2014-15 budget. In order to achieve an ambitious tax collection target of Rs 2810 billion in 2014-15 against a revised estimates of revenue collection of Rs 2275 billion for the outgoing fiscal, FBR will have to achieve over 25 percent growth with the help of taxation measures, withdrawal of exemptions, administrative and enforcement measures. An FBR team headed by its Chairman Tariq Bajwa gave a detailed presentation to the PM at the PM''s House. The PM approved the revenue measures of approximately Rs 230-240 billion of sales tax, income tax, federal excise duty and customs duty. The measures would be reflected in the Finance Bill 2014. The presentation was given in the presence of Finance Minister Ishaq Dar and other senior officials of the Ministry of Finance.

Sources confirmed to Business Recorder that the PM has approved 90 to 95 percent proposals finalised by the Finance Ministry and FBR during the budget making exercise pertaining to the withdrawal of SROs and exemptions through Finance Bill 2014. The revenue impact of withdrawal of exemptions through SROs has been estimated at around Rs 70 billion whereas the remaining amount could be raised through taxation measures of sales tax, income tax, and federal excise duty. Sales and federal excise measures have been estimated at nearly Rs 65-70 billion. Measures in relation to direct taxes have been estimated at over Rs 100 billion for 2014-15.

Taking into account the targets of 5.1 percent GDP growth and 8 percent inflation plus buoyancy of taxes, the FBR''s revenue could grow up to Rs 2625 billion by adding up to Rs 350 billion to the revised tax collection of Rs 2275 billion. The remaining Rs 285 billion will have to collected by FBR through different tax measures and administrative and enforcement actions in 2014-15.

Responding to a query on surrendering the power of SROs to the Parliament, sources said it would be up to the government to take a decision on this highly sensitive subject; although government''s tax collection arm has shown its willingness to surrender this power to the Parliament.

There are certain Free Trade Agreements, Preferential Trade Agreements and Avoidance of Double Taxation agreements with other countries so these SROs would be protected. The government has decided to withdraw those SROs which are individual or companies specific in their nature. In case of a huge involvement of tax revenues, FBR will bring those sectors into normal tariff regime after withdrawal of SROs. Sources said the government has committed with the IMF to withdraw SROs and abolish tax exemptions over the next three years so in the upcoming budget only first phase will be made part of the next Finance Bill.

The focus of budget will be aimed at bringing rich and wealthy and those who preferred to remain aloof from their tax obligations into the tax net. FBR would propose increased taxation incidence through direct taxes in the FY 2014-15 budget. But its reliance on withholding taxes will remain unchanged as the share of WHT in overall direct taxes stood at around 60 percent.

Around Rs 17 billion would be generated through a new Federal Excise Duty (FED) structure on all brands of cigarettes. The imposition of the FED on certain items and restoration of excise duty on certain items would generate Rs 6 to 8 billion. The government has rejected a major budgetary measure of imposition of special excise duty (SED) on the import and local manufacturing of goods. The projected revenue from the measure was Rs 10 billion in 2014-15.

FBR will also generate an additional revenue from 10 percent adjustable withholding tax and increase in excise duty on passengers travelling aboard by air through club, business and first class segments. There would be increase from 6 to 10 percent withholding tax on services provided by professionals such as doctors, accountants, architects, dentists, doctors, engineers, interior decorators and lawyers in budget (2014-15).