Pakistan Rejects Proposal to Tax Pensions in Upcoming Budget

Pakistan’s government has withdrawn a major budget proposal that would have imposed a 10% tax on pensions exceeding Rs. 100,000 per month. This decision comes after Prime Minister Shehbaz Sharif directed tax authorities to explore alternative revenue measures.

Tax on Pensions Scrapped:

  • Initial Proposal: The Federal Board of Revenue (FBR) had proposed a 10% tax on high pensions in the Finance Bill 2024.
  • Prime Minister’s Intervention: Prime Minister Sharif directed a shift in focus, seeking alternative revenue sources to avoid taxing pensioners.

Discussions with IMF:

  • Virtual Talks: Sources report virtual discussions between Pakistani officials and the International Monetary Fund (IMF) regarding budget proposals.
  • Focus on Uniform Tax: The discussions reportedly centered on proposals for a uniform tax structure for both businesses and salaried individuals.
  • Pension Taxation Debated: The Pakistani team reportedly informed the IMF of the government’s decision to forgo pension taxation.

Final Decision Pending:

  • Proposals on Hold: Several significant proposals, including pension tax and sales tax increases, have been put on hold based on the Prime Minister’s directives.
  • Further Discussions: The Pakistani team is expected to brief Prime Minister Sharif on the details of their virtual talks with the IMF.

Relief for Pensioners:

This decision provides welcome relief for Pakistani pensioners who rely on their monthly income. The government is now tasked with finding alternative ways to generate revenue in the upcoming budget.

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