The salaried class in Pakistan has been eagerly waiting for tax relief in the upcoming Finance Bill 2023. The federal government had announced plans to provide relief to those earning up to 1.2 million Pakistani rupees per annum. However, recent developments suggest that the proposed tax relief may not be implemented as planned.
In this article, we will provide an overview of the proposed tax relief for the salaried class in Pakistan, the reasons behind the potential withdrawal of the relief, and the implications for taxpayers and the economy as a whole.
Proposed Tax Relief for Salaried Class
The Federal Board of Revenue (FBR) had announced plans to provide relief to the salaried class by increasing the basic threshold. The proposed budget aimed to collect 125 billion Pakistani rupees from the salaried class, but the FBR was also supposed to give a relief of 47 billion rupees by increasing the basic threshold.
The proposed tax relief was aimed at benefiting those earning up to 1.2 million Pakistani rupees per annum, which is a significant portion of the salaried class in Pakistan. The relief would have provided much-needed relief to taxpayers who are already struggling to make ends meet due to the economic challenges faced by the country.
Withdrawal of Proposed Taxes on Edible Oil, Steel, Tobacco, and Beverages
However, the proposed budget also included taxes on edible oil, steel, tobacco, and beverages. These proposals were withdrawn at the last moment due to the expected backlash from the public and to save the political narrative of the government.
The government was also unable to propose windfall taxes on emerging sectors that had the potential for generating significant tax revenue. As a result, the government may be forced to withdraw the proposed tax relief on the salaried class.
IMF Rejection of Proposed Tax Relief
The International Monetary Fund (IMF) has completely rejected the proposed tax relief on the salaried class. This rejection may force the government to make amendments in the Finance Act 2023 and may also lead to the imposition of taxes on industries such as oil, tobacco, steel, and beverages.
Implications for Taxpayers and the Economy
The potential withdrawal of the proposed tax relief on the salaried class will have significant implications for taxpayers and the economy as a whole. The salaried class is already burdened with a high tax rate, and any further imposition of taxes will negatively impact their purchasing power and standard of living.
Moreover, the government’s inability to generate revenue from emerging sectors will create a shortfall in tax revenue, leading to further economic challenges for the country.
In conclusion, the proposed tax relief for the salaried class in Pakistan may not be implemented as planned due to various factors such as IMF rejection, withdrawal of proposed taxes on other industries, and the government’s inability to generate revenue from emerging sectors. This potential withdrawal will have significant implications for taxpayers and the economy, and the government needs to carefully consider the consequences before making any decisions.