The administration implemented certain radical steps to raise the FBR‘s tax collection target by Rs. 466 billion, including hiking the tax rate on high-income earners to raise Rs. 120 billion for poverty alleviation and Rs. 35 billion by raising tax rates for the salaried class.
For the upcoming fiscal year 2022–2023, the government imposed a 10 percent super tax on 13 high-earning sectors, which will affect Rs. 80 billion in revenue.
With the aid of all these taxing methods, the FBR will be able to boost the tax collection target up to Rs. 7,470 billion. The exchange rate depreciation will also allow the FBR to earn more taxes at the import stage in the budget for 2022–2023.
In order to raise a net additional 35 billion rupees for the national coffers, the government changed the tax rates for the salaried class.
The government repealed tax relief worth Rs. 47 billion and subsequently imposed a tax amount of Rs. 35 billion on personal income tax (PIT), raising a total of Rs. 80 billion in taxes.
Consequently, the FBR was expected to raise Rs. 235 billion from the salaried class in the upcoming budget as opposed to Rs. 200 billion in the previous fiscal year.
With the IMF, the PTI-led government has agreed to boost taxes by Rs. 335 billion through higher salary-related tax bracket rates.
However, the IMF was persuaded by the PDM-led coalition administration to accept Rs. 100 billion less than had been agreed upon by the previous PTI-led government.
The administration suggested a tax rate of 2.5 percent for the salaried class for income ranges of Rs. 50,000 to Rs. 100,000.
The suggested tax rate increased to 12.5 percent for those who make between Rs. 100,000 and Rs. 300,000 in monthly income.
The FBR proposed raising the tax rate from 17.5 percent to 20 percent in cases where the taxable income is greater than Rs. 3,600,000 but not more than Rs. 6,000,000.
It is suggested that the FBR tax rate be raised from 22.5 percent to 25 percent in cases where the taxable income surpasses Rs. 6,000,000 but does not surpass Rs. 12,000,000.
The FBR will impose a tax amount of Rs. 2,004,000 + 32.5 percent of the amount exceeding Rs. 12,000,000 on an annual basis when the taxable income exceeds Rs. 12,000,000. The FBR suggested a tax rate of 35% on the aforementioned income.
The proposed tax by the government on jewellery stores as on-premises businesses is set at Rs. 40,000 per jewellery store.
Only a small number of the almost 30,000 jewellery stores are registered. Consumer sales of gold now only incur a one percent withholding tax instead of the previous four percent.
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