The government will review salary tax after IMF objection as the proposed tax relief in Personal Income Tax (PIT) to the tune of Rs47 billion is totally unacceptable to the IMF.
According to the top official sources, the IMF had conveyed its crystal-clear reservations over the proposed rates in Personal Income Tax whereby the FBR has given relief to those who are earning salary up to 1.2 million rupees per annum.
The IMF wants to restrict relief to only those who are earning up to Rs0.2 million per month for providing relief to the urban middle class and then jack up tax rates in all other slabs.
The IMF wanted increased revenue collection up to Rs125 billion by placing PIT in a progressive format but the government took steps another way round and made it impossible for both sides for striking a staff-level agreement under the $6 billion Extended Fund Facility with the existing proposal of Personal Income Tax (PIT).
The Finance Bill 2022 proposed that the taxable ceiling up to Rs1.2 million will pay just Rs100 taxes. Earlier, the salary earner up to Rs800,000 on a per annum basis would have to pay Rs10,000, up to Rs1.2 million Rs30,000 and up to Rs2 million Rs120,000. Under the proposed rate, the salary earner of Rs2 million per annum will have to pay only Rs56,000.
According to new slabs introduced for the salaried class, where taxable income does not exceed Rs600,000, there will be zero tax. Where the taxable income exceeds Rs600,000 but does not exceed Rs1,200,000, there will be a tax of just Rs100.
Where the taxable income exceeds Rs1,20,000 but does not exceed Rs2,400,000, there will be a tax of 7 percent of the amount exceeding Rs1,200,000.
Also, where the taxable income exceeds Rs6,000,000 but does not exceed Rs12,000,000, the FBR will deduct Rs654,000 plus 22.5 percent of the amount exceeding Rs6,000,000. Where the taxable income exceeds Rs12,000,000, the FBR will charge a tax amount of Rs2,004,000 plus 32.5 percent of the amount exceeding Rs12,000,000 on a per annum basis.
For all the latest updates and news, visit CxO Global FORUM.
