Pakistan 'links' tax relief for salaried class with IMF's consent

ISLAMABAD: Pakistan has ‘linked’ tax relief for the salaried class with the consent of the International Monetary Fund (IMF) in the upcoming FY2025-26 budget, ARY News reported on Wednesday, citing sources.

As per details, as preparations for the upcoming federal budget are underway, high-level discussions are taking place to explore avenues of tax relief, particularly for the salaried class and real estate sector.

Insiders reveal that one of the key proposals under consideration is the elimination of the 3% Federal Excise Duty (FED) on property sales.

The removal of this duty is expected to provide significant relief to the real estate sector.

For salaried individuals, the Pakistan government is exploring adjustments to income tax slabs, with a particular focus on enhancing the annual tax exemption threshold beyond the current limit of Rs600,000. However, any relief in this regard will be subject to approval from the International Monetary Fund (IMF), the sources said.

According to Federal Board of Revenue (FBR) sources, only the lower income tax slabs are likely to be revised in the upcoming budget, with no relief currently proposed for higher-income earners. The proposals will be discussed with Prime Minister Shehbaz Sharif before being finalized.

As part of the proposed measures, three options have been drafted to offer tax relief to the salaried class. One key suggestion includes expanding the first income tax slab to accommodate individuals earning more than Rs50,000 per month.

Sources further added that the new threshold for the first slab may exceed the current Rs600,000 annual exemption, thus providing broader relief.

Additionally, FBR is working on simplifying the income tax return filing process and revising the income tax slabs to enhance compliance and ease of filing.

These proposals have been prepared by the FBR as part of the budget framework for the upcoming fiscal year.