ISLAMABAD: The federal government is mulling a massive tax relief worth Rs67 billion for salaried class in the upcoming budget.
The Federal Board of Revenue has already proposed increase in the tax exemption threshold from the current Rs400,000 to Rs500,000 annual income.
For the income group falling in the category of Rs500,001 to Rs800,000, the FBR has proposed a nominal tax rate of 1%. The current income tax rate for Rs400,001 to Rs750,000 is 10 per cent.
The FBR has proposed to set only 2% income tax rate for the category falling in the range of Rs800,001 to Rs1.2 million as the existing rate for the class earning between Rs750,001 to Rs1.5 million is Rs35,000 plus 10% tax of the value exceeding Rs750,000.
The tax body has also recommended that those whose annual income will be above Rs1.2 million should be charged at different rates ranging from 15% and 20%.
If it passes the hurdle, the wage-boosting measure will see a 90% cut in tax burden of the lowest income group and around 43% for the highest income group, said officials in the finance ministry.
The Rs67-billion relief is still lower than what Prime Minister Shahid Khaqan Abbasi desired during the in-house meetings, said the sources. PM Abbasi’s plan talks about Rs100 billion relief to the salaried class, the sources said.
The extremely narrow tax base remains a concern for all stakeholders. Less than half a percentage point of the total population or 1.261 million individuals and companies filed their income tax returns for tax year 2017, according to the new Active Taxpayers List.
