Friday, September 24, 2021

Govt decides against proposal to exempt tax on up to Rs1.2 mn annual income


KARACHI: The government has reportedly decided to reverse the proposal of tax exemption on individuals earning Rs1.2 million annual income and impose tax on Rs0.4 million annual income.

The ruling party has failed to implement upon the proposal made by its newly-elected Finance Minister Miftah Ismail, on behalf of the prime minister while announcing budget 2018-19, in the National Assembly of tax exemption on Rs1.2 mn salary a year rather than on annual income of Rs0.4 mn.

According to the budget document, “Tax rates for individuals, as reduced in tax reforms package, has further been amended. Rs1,000 and Rs2,000 tax has been proposed to be introdced for incomes slabs Rs400,001 to Rs800,000 and from Rs800,001 to Rs1,200,000, respectively.”

Sources said about 1.2 million people were registered in the tax net all over the country and exemption in the taxes would mean exclusion of 44 percent tax-payers. Therefore, tax has been levied back on individuals having lower income to contain 0.52 mn people in the tax net.

The sources said the reversal on the proposal was made by the PM on request of the Federal Board of Revenue (FBR).

Earlier while announcing the budget, Miftah Ismail had quoted the reform package announced by Prime Minister Shahid Khaqan Abbasi to lower taxes and said, “Tax rates on individuals have been lowered. Complete tax exemption has been given to people who earn up to Rs1.2 million a year or Rs0.1 million a month. This exemption limit, which was previously Rs0.4 million a year has been increased three times to Rs1.2 million a year. Tax will be levied at the rate of 5 percent for the income between 0.2 and 0.4 million monthly.”

“People earning above 0.4 million monthly will be taxed at the rate of 15 percent. In Pakistan highest tax burden was on the salaried middle-class which include teachers, doctors, lawyers, nurses, accountants. Reduced tax rates will significantly lower tax burden on this class,” he had said.

Read More: Targeting 6.2pc GDP growth, govt unveils historic sixth budget


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