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Pakistan is in talks with the International Monetary Fund (IMF) to secure tax relief for the salaried class, as part of budget discussions aimed at balancing public relief with revenue generation.
According to an ARY News report, the IMF raised concerns over Pakistan’s ability to meet tax targets if relief is provided to the salaried class.
The Federal Board of Revenue (FBR) assured the IMF of alternative revenue strategies, though the lender pushed for the withdrawal of sales tax exemptions and proposed new taxes to boost revenue.
The new IMF proposal included an 18 percent sales tax on imported solar panels and a 1.5 percent withholding tax on all imports, except for industrial raw materials.
READ: Salaried class paid record Rs391bn tax in nine months
The IMF also demanded that builders and developers be registered to bring the real estate sector into the tax net.
Despite these demands, partial agreement was reached on salary and pension increases, with further negotiations expected to finalize these discussions.
Under the current budget proposals, the salaried class earning Rs 100,000 may see their tax rate reduced from 5 percent to 2.5 percent.
Individuals earning Rs 183,000 per month may pay up to 12.5 percent tax on their salaries, meanwhile, the income tax ratio will be brought down to 22.5 percent from the current 25 percent for a salaried person earning Rs 267,000 per month.
These suggestions will be reviewed in detail as budget talks with the IMF continue, with the government pushing to balance relief for the salaried class.
