IMF has withdrawn relief provided to the salaried class on June 10.
New Delhi: Owing to the demand of the International Monetary Fund (IMF) withdrawing relief given on June 10, Shehbaz Sharif government on Friday increased the tax rates for the salaried class. It had withdrawn the tax relief to the salaried class announced on June 10 and the Federal Board of Revenue (FBR`s) collection target was increased to Rs 7,470 billion, reported Geo News.
On Personal Income Tax (PIT), the government raised a tax amount of Rs 80 billion as first, the government abolished tax relief of Rs 47 billion and then raised a tax amount of Rs 35 billion, so the FBR was going to collect Rs 235 billion from salaried class in the next budget against a collection of Rs 200 billion in the outgoing fiscal year.
The Ministry of Finance high-ups disclosed to The News that all IMF`s demands on the fiscal front were almost fulfilled and now it was expected that the Fund staff would share a draft of the Memorandum of Financial and Economic Policies (MEFP) next week on Monday.
The IMF and the Ministry of Finance as well as the State Bank of Pakistan are holding parleys continuously. Finance Minister Miftah Ismail also chaired a meeting related to the government`s strategy for hiking power tariffs, reported Geo News.
The Fund has objected to the government`s estimates of allocating Rs 225 billion for Price Differential Claims (PDCs) for the next budget as the IMF assessed that it might escalate to over Rs 350 to Rs 450 billion.
The government, to collect the amount, took some drastic measures by increasing the tax rate on high-income earners to fetch Rs 120 billion for poverty alleviation and Rs 35 billion by raising tax rates for the salaried class.
The government slapped a 10 per cent super tax on 13 high-earning sectors with a revenue impact of Rs 80 billion for the next financial year 2022-23.
The Poverty Alleviation Tax, a one-time tax, which was levied at the rate of 2 per cent of the income of over Rs 300 million through the Finance Bill on June 10, has been proposed to amend as a 1 per cent tax on the income between Rs 150 million to 199.99 million, 2 per cent tax on the income between Rs 200 million to 249.99 million, 3 per cent tax on the income between Rs 250 million to 299.99 million and 4 per cent tax on the income of 300 million and above, reported Geo News.
The government slapped a 10 per cent super tax on 13 big industries including cement, sugar, steel, oil and gas, RLNG Terminal, textiles, banking, auto industry, tobacco, fertilizer, aviation, chemicals and beverages.
The government has proposed a tax on jewellery shops as on-premises of shops, it has been fixed at Rs 40,000 per shop of jewellery. There are nearly 30,000 jewellery shops and only a few shops are registered. The Withholding Tax on the sale of gold by consumers was cut to 1 per cent from 4 per cent, reported Geo News.
The Imran Khan-led PTI government had made a commitment with the IMF for raising the tax amount of Rs 335 billion through an increased rate of slabs for the salaried class but the PDM-led coalition government convinced the IMF for collecting Rs100 billion less than agreed by the previous PTI-led government with the IMF.
