The government may offer limited tax relief in the upcoming budget. However, IMF programme conditions continue restricting fiscal flexibility. Officials said tax authorities submitted several relief proposals to Prime Minister Shehbaz Sharif. The government will now discuss the final package with the IMF.
The proposed measures mainly target salaried individuals and industrial sectors. Authorities hope to finalize decisions before June 10. The government is considering tax relief for middle-income salaried employees. Around 550,000 taxpayers fall within the targeted income brackets.
Officials proposed reducing income tax rates by four percent. This relief would apply to monthly incomes between Rs200,000 and Rs267,000. Meanwhile, taxpayers earning up to Rs341,000 monthly may receive a five percent reduction. The proposal aims to ease financial pressure on middle-income households.
Salaried Class Likely to Receive Targeted Relief
The government is also reviewing changes to higher income tax slabs. Officials may introduce a new slab for incomes up to Rs583,000 monthly.
Under the proposal, authorities would apply a 32 percent tax rate. Currently, higher earners face a 35 percent rate plus surcharge.
Officials are also considering removing the 10 percent surcharge. However, discussions with the IMF remain ongoing.
The IMF reportedly agreed to relax the top tax threshold. Nevertheless, the government seeks greater flexibility for taxpayers.
Authorities are also evaluating possible reductions in mobile phone taxation. Currently, taxes can exceed 55 percent of handset prices.
Businesses Seek Tax Cuts Amid Budget Discussions
The government is reviewing several business-related tax proposals. These include abolishing the 15 percent dividend income tax. Officials estimate the measure could reduce revenue by Rs90 billion. Therefore, authorities must assess available fiscal space carefully.
Another proposal seeks to remove one percent advance tax on exporters. This measure could cost the treasury up to Rs85 billion.
Meanwhile, significant relief for the real estate sector appears unlikely. Officials may also increase taxes on hybrid vehicles. The government continues balancing economic relief with IMF commitments. Final decisions are expected after ongoing negotiations conclude.
