KARACHI: Tax concession concessions given to salary persons in the recent budget may be withdrawn by the elected government owing to extreme fiscal conditions due to Rs 1000b green channel losses to FBR.
Through Finance Act, 2018 the previous government provided relief to salary class driving income Rs1,200,000 by imposing nominal amount of tax of Rs2,000 per year and up to income up of Rs800,000 the tax rate of Rs1,000 per year.
In her recent visit to Pakistan Stock Exchange (PSX), caretaker finance minister Dr. Shamshad Akhtar expressed concerns over present fiscal position and said the tax concessions would add pressure.
The PML-N government before conclusion of its tenure and in its last budget announced various reliefs to taxpayers ahead of general elections that are scheduled for July 25.
The then finance minister Dr. Miftah Ismail in his budget speech announced that minimum income threshold for tax at Rs1,200,000, which meant persons driving income up to Rs1.2 million would be exempted from income tax.
However, the parliament disapproved the proposal considering massive fall in number of tax returns. So it was decided that a nominal amount should be imposed in order to prevent fall in numbers of income tax returns.
Previously the minimum threshold was Rs400,000, which was retained but the tax rates were changed for various slabs. As per new slabs persons deriving income within Rs400,001 to Rs800,000 would pay Rs1,000 per year and under the slab of Rs800,001 to Rs1,200,000 will pay Rs2,000 per year. The estimated loss of this concession is around Rs74 billion.
It is pertinent to mention here that if losses of Rs 1000 billion inflicted on the national exchequer through misuse of customs green channel facility are averted, the government could continue giving reliefs to salaried class. As per statement of an FBR official, about 10 million containers have been cleared through green channel at Karachi ports, causing losses of Rs 1000 billion to the economy. If Finance Minister and FBR chairman take prompt action against illegal clearance of huge number of containers thru green with connivance of corrupt customs officials and smugglers of green channel, then the country could save billions of rupees to avoid putting burden on income taxpayers and build mega projects including much-needed dams to resolve the problem of water scarcity.
Get more details, read book:
