ISLAMABAD: The proposed personal income tax (PIT) tax relief of Rs 47 billion is totally unacceptable to the IMF and the government has no choice but to consider bringing it in Changes.
Top official sources confirmed to The News on Sunday night that the IMF had made clear reservations about the proposed rates for personal income tax, under which the FBR provided relief to those earning a salary of up to 1.2 million rupees per year.
The IMF wants to limit the relief to those earning up to 0.2 million rupees a month for relieving the urban middle class, then raise tax rates in all other brackets.
Unlike this broader agreement with the IMF during the 6th review under the PTI-led government, which was placed as a structural benchmark under the IMF agreement, the RBF offered relief to those earning up to ‘at one million rupees per month salary in the budget. for 2022-23 through the Finance Bill 2022 in parliament. These proposed personal income tax rates, if left unmodified, could turn into a major blockage to reaching a staff-level deal with the IMF.
The IMF wanted an increase in revenue collection up to Rs 125 billion by putting the PIT in a phased format, but the government took steps in another direction and made it impossible for the two sides to reach an agreement at the staff level under the $6 billion expanded funding mechanism with the existing proposal. personal income tax (IPP).
The Finance Bill 2022 has proposed that the taxable ceiling up to Rs 1.2 million will only pay Rs 100 in tax. Earlier, employee up to Rs 800,000 per annum had to pay Rs 10,000, up to Rs 1.2 million Rs 30,000 and up to Rs 2 million Rs 120,000. According to the proposed rate, the employee of 2 million rupees per year will only have to pay 56,000 rupees.
Earner up to 3 million rupees previously paid 282,000 rupees on an annual basis, but now the proposed rate of tax payable is reduced to 159,000 rupees. Earner up to 4 million rupees had to pay income tax of 470,000 rupees, but now according to the proposed rate, the tax liability is reduced to 304,000 rupees. The employee up to 5 million rupees had to pay an amount of tax of 670,000 rupees, but according to the proposed rate, the tax payable was reduced to 479,000 rupees.
The tax rates proposed under the Finance Bill 2022 continued to provide relief up to one million rupees for wage earners who had to pay an amount of tax of 1.845 million rupees, but now, in Under the Finance Bill 2022, the tax liability has been reduced to Rs 1.554 million for salary. income up to Rs one million per month. In the remaining tranches up to Rs20 million, Rs40 million, Rs60 million and Rs80 million, the proposed tax rates have been revised upwards.
When contacted, the former Managing Director of the Economic Reform Unit (ERU) in the Ministry of Finance, Dr Khaqan Najeeb, said the only way out of the impasse with the IMF would be to to make changes to the proposed slabs that would be a precondition for concluding an agreement with the IMF. He explained the changes that the relief should be granted at Rs0.2 million per month.
In the Finance Bill 2022, the FBR increased the limit of the taxable ceiling from Rs600,000 to Rs1,200,000, and the number of slabs was reduced from 12 to 7 under the personal income tax regime .
According to the new slabs introduced for the salaried class, where the taxable income does not exceed Rs600,000, there will be no tax. When taxable income exceeds 600,000 rupees but does not exceed 1,200,000 rupees, there will be a tax of only 100 rupees.
Where the taxable income exceeds Rs1,20,000 but does not exceed Rs2,400,000, there will be a 7% tax on the amount exceeding Rs1,200,000.
Where the taxable income exceeds 2,400,000 rupees but does not exceed 3,600,000 rupees, there will be 84,000 rupees plus 12.5% of the amount exceeding 2,400,000 rupees on an annual basis. Where the taxable income exceeds Rs. 3,600,000 but does not exceed Rs. 6,000,000, the FBR will impose a tax of Rs. 234,000 plus 17.5% of the amount exceeding Rs. 3,600,000.
Where the taxable income exceeds Rs. 6,000,000 but does not exceed Rs. 12,000,000, the FBR will deduct Rs. a tax amount of Rs 2,004,000 plus 32.5% of the amount exceeding Rs 12,000,000 on an annual basis.