AIRLINK 86.21 Decreased By ▼ -0.99 (-1.14%)
BOP 4.97 Decreased By ▼ -0.05 (-1%)
CNERGY 4.08 Decreased By ▼ -0.01 (-0.24%)
DFML 37.22 Decreased By ▼ -0.68 (-1.79%)
DGKC 91.20 Decreased By ▼ -2.68 (-2.85%)
FCCL 22.99 Decreased By ▼ -0.78 (-3.28%)
FFBL 33.74 Increased By ▲ 1.07 (3.28%)
FFL 9.19 Decreased By ▼ -0.06 (-0.65%)
GGL 10.05 Increased By ▲ 0.02 (0.2%)
HASCOL 6.25 Decreased By ▼ -0.29 (-4.43%)
HBL 126.25 Increased By ▲ 4.33 (3.55%)
HUBC 158.29 Increased By ▲ 12.64 (8.68%)
HUMNL 11.08 Increased By ▲ 0.58 (5.52%)
KEL 4.64 Decreased By ▼ -0.10 (-2.11%)
KOSM 4.09 Decreased By ▼ -0.10 (-2.39%)
MLCF 38.25 Decreased By ▼ -0.55 (-1.42%)
OGDC 133.40 Decreased By ▼ -1.61 (-1.19%)
PAEL 25.40 Increased By ▲ 0.32 (1.28%)
PIBTL 6.22 Decreased By ▼ -0.05 (-0.8%)
PPL 119.25 Decreased By ▼ -0.43 (-0.36%)
PRL 24.58 Increased By ▲ 0.48 (1.99%)
PTC 12.28 Increased By ▲ 0.06 (0.49%)
SEARL 59.32 Decreased By ▼ -0.48 (-0.8%)
SNGP 65.60 Increased By ▲ 0.60 (0.92%)
SSGC 9.87 Decreased By ▼ -0.18 (-1.79%)
TELE 7.85 Decreased By ▼ -0.02 (-0.25%)
TPLP 9.49 Decreased By ▼ -0.25 (-2.57%)
TRG 63.80 Decreased By ▼ -0.50 (-0.78%)
UNITY 27.26 Increased By ▲ 0.21 (0.78%)
WTL 1.28 Decreased By ▼ -0.04 (-3.03%)
BR100 8,341 Increased By 31.1 (0.37%)
BR30 26,457 Increased By 506.8 (1.95%)
KSE100 78,810 Increased By 9 (0.01%)
KSE30 25,474 Increased By 35.6 (0.14%)

ISLAMABAD: Federal Board of Revenue (FBR) Chairman Asim Ahmad said Tuesday that the FBR is reviewing the tax relief of Rs 47 billion provided to the salaried class through the Finance Bill, 2022, keeping in view the fact that the government will not burden the salaried individuals.

At the conclusion of the Senate Standing Committee on Finance meeting at the Parliament House on Tuesday, the FBR chairman responded to various questions on the personal income tax reforms and relief to the salaried class.

Salaried class tax structure: govt in a fix

The FBR chairman said that we have no problem or issue in the taxation measures of Rs355 billion taken in the budget (2022-23) through the Finance Bill, 2022. However, there is only one issue of personal income tax where the government is committed not to burden the salaried class in the next fiscal year. There is a disagreement between the IMF and the government on the personal income tax rates.

Major relief has been provided for salaried individuals having a revenue impact of Rs47 billion. The limit for taxation of salary is enhanced to Rs1,200,000 from the current limit of Rs600,000 and the slabs have been reduced from 12 to seven. The maximum rate has been reduced from 35 per cent to 32.5 per cent. The relief has also been provided to business individuals and AOPs. The limit for taxation is enhanced to Rs600,000 from the current limit of Rs400,000.

When asked about the objections raised by the International Monetary Fund (IMF) on exemptions given in the budget (2022-23), the FBR chairman said that every proposed exemption has been reviewed by the IMF and the government has to give justification for each exemption. However, they agree to allow exemption in genuine cases. For example, sales tax exemption has been restored on imports by the UN diplomats/diplomatic missions and privileged persons. They have no objection on granting this exemption which was inadvertently withdrawn.

He said that at present, most of the people fall within the category of salary earning upto Rs0.2 million per month. The maximum salaried individuals fall within the slabs of monthly salary upto Rs0.2 million per month. If we calculate the revenue impact of higher-income earners covered under the upper-income tax slabs, the number of taxpayers in high slabs is so less that the doubling of the tax rates would not have the impact of the required amount needed from the salaried class. The base of the higher slabs is so narrow that it would not generate additional revenue even after a substantial increase in tax rates for the higher-income earners (above Rs0.2 million per month).

“We cannot impose ridiculously high tax rates like 75 percent instead of 35 percent on high-income earners, which are very few on the top. On the other hand, the base of the lower-income earner is very wide, having an impact on revenue,” Asim said.

Now, we are in a fix that the government does not want to burden the lower-income earners.

However, if we do not increase the taxes on the low-income earners our revenue impact would not go into positive i.e. from existing tax relief of Rs47 billion to revenue generation from the salaried class.

However, the government has to give tax relief to the lower-salaried class as the cost of living is so high including inflation. We have to give relief to the lower-salaried employees at any cost. Therefore, we are reviewing different slabs of the salaried class keeping in view the fact to ensure relief to the salaried individuals, Asim added.

Copyright Business Recorder, 2022

Comments

Comments are closed.