The International Monetary Fund (IMF) has rejected the Rs. 47 billion tax relief granted to the salaried class through the Finance Bill 2022, according to Chairman of the Federal Board of Revenue (FBR) Asim Ahmad.
Ahmad told the press at Parliament House that the FBR would now propose modifications to tax slabs since the government has no choice but to follow the IMF’s demand. He claimed that the FBR is designing several tax slab models for salaried persons in order to lower the Rs. 47 billion tax relief offered in the budget.
The IMF and the government have a dispute on personal income tax rates, according to the FBR Chairman. The IMF does not accept the current plan. He stated that the government did not wish to burden low-income individuals. However, if low-income earners’ taxes are not raised, the revenue impact will be negative, he noted.
He said that the government must provide tax relief to low-wage workers since the cost of living has risen dramatically owing to inflation. He stated that “at whatever cost,” he must provide relief to low-wage employees.
In the budget for fiscal year 2022-23, the government proposed raising the income tax exemption ceiling from Rs. 50,000 per month to Rs. 100,000 per month. In addition, the original twelve slabs were trimmed to seven.
The majority of the individuals, according to the FBR Chairman, get paid up to Rs. 200,000 every month. Because the overall number of high-income taxpayers is so small, raising tax rates would have no major revenue impact on the salaried class.
“We cannot impose ridiculously high tax rates like 75 percent instead of 35 percent on high-income earners whereas the base of the lower-income earner is very wide, having an impact on revenue collection” he stated.
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