ISLAMABAD: Pakistan is pushing for income tax relief for salaried individuals during ongoing virtual budget negotiations with the International Monetary Fund (IMF).
During the discussions, IMF officials raised concerns over how Pakistan plans to meet its revenue targets if tax concessions are extended to the salaried segment. In response, the Federal Board of Revenue (FBR) outlined several measures aimed at compensating for potential revenue shortfalls.
However, the IMF has reportedly maintained a firm stance on eliminating all existing sales tax exemptions and concessions. Among the proposed measures is the introduction of an 18% sales tax on solar panel imports and a 1.5% withholding tax on all imported goods, with limited exemptions for industrial raw materials.
The IMF has also called for the mandatory registration of builders and developers in the real estate sector to expand the tax base. While partial consensus was reportedly reached on adjusting government salaries and pensions, further talks are scheduled to finalize the fiscal framework for the upcoming budget.
As part of the new budget proposals under discussion:
- Individuals earning Rs100,000 per month could see their income tax rate reduced from 5% to 2.5%.
- Those earning Rs183,000 monthly may be taxed up to 12.5%.
- For individuals in the Rs267,000 income bracket, the rate is expected to drop from 25% to 22.5%.
These proposals are subject to further review and negotiation with the IMF as Pakistan works to balance economic reform commitments with public relief measures in the forthcoming budget.
