The Federal Board of Revenue (FBR) has proposed a series of tax reforms to collect up to 450 billion rupees and meet the target of 7.2 trillion rupees. These reforms include personal tax reforms, which may involve revising the slab rates. The FBR recently discussed these proposals with the Prime Minister, and here’s what you need to know:
Reduced Slab Rates
The FBR proposes to reduce the total number of slabs for salary persons to six. The current number of slabs is too high, which makes it complicated for people to calculate their taxes.
- No Change for Lower Salary Income: If you earn up to 0.1 million rupees, there will be no change in your salary income tax. This is good news for lower income earners.
- Increased Tax on 1 to 2 Lakh Monthly Income: If you earn between 1 to 2 lakh rupees per month, you may see an increase in your monthly income tax. This is because the FBR is targeting the salaried class with higher salaries to generate more revenue.
- Higher Tax on Above 2 Lakh Monthly Income: If you earn above 2 lakh per month income, your income tax will increase. This is part of the FBR’s efforts to collect more revenue and meet their target.
- Time-bound Income Tax: The FBR may also implement a time-bound income tax on the steel sector. Additionally, the minimum tax on edible oil may be raised from 2% to 6%.
- Windfall Levy on Emerging Sectors: The FBR is also planning to implement a windfall levy on new emerging sectors, which are making bulk profits but not paying the due tax.
- Luxury Income Tax or Wealth Tax: To generate more revenue, the FBR is also looking to implement a luxury income tax or wealth tax on high earning individuals.
- Targeting Salaried Individuals: About 70% of salaried people in Pakistan fall in the slab of 1 million to 6 million. The FBR is targeting the salaried class with higher salaries to generate more revenue.
The FBR’s proposed tax reforms are aimed at generating more revenue and meeting their target of 7.2 trillion rupees. However, the ease of business opportunities and facilitation of new business community is also a priority for the stabilization of Pakistan’s economy. These tax reforms will help the government achieve its goals while ensuring that salaried individuals pay their fair share of taxes.