ISLAMABAD: Federal Board of Revenue (FBR) Chairman Asim Ahmed said on Tuesday that the FBR is revising the Rs 47 billion tax relief given to the salaried class through the Finance Bill 2022, keeping in mind mind the fact that the government will not charge the salaried individuals.
Following the meeting of the Senate Standing Committee on Finance in Parliament on Tuesday, the Chairman of the FBR answered various questions on the reforms of the personal income tax and the relief of the working class.
The FBR Chairman said that we have no problem or problem with the Rs 355 Billion fiscal measures taken in the Budget (2022-23) through the Finance Bill 2022. However, there is no has only one personal income tax issue where the government has pledged not to weigh down the salaried class in the next fiscal year. There is a disagreement between the IMF and the government over personal income tax rates.
Major relief was given to salaried persons impacting income by Rs 47 billion. The wage tax limit is increased 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 percent to 32.5 percent. The relief was also granted to individuals and AOPs. The tax limit is increased to 600,000 rupees from the current limit of 400,000 rupees.
Asked about the objections raised by the International Monetary Fund (IMF) on the exemptions granted in the budget (2022-23), the chairman of the FBR said that each proposed exemption has been reviewed by the IMF and that the government must justify each exemption. . . However, they agree to allow exemption in actual cases. For example, sales tax exemption has been reinstated on imports by UN diplomats/diplomatic missions and privileged persons. They have no objection to granting this exemption which was inadvertently withdrawn.
He said that at present, most people fall into the category of salaried earners earning up to 0.2 million rupees per month. The maximum of salaried persons is in the monthly salary bands up to 0.2 million rupees per month. If one calculates the impact on the incomes of high earners covered by the top tax brackets, the number of taxpayers in the top tax brackets is so much lower that doubling tax rates would not have the impact of required amount required of employees. to classify. The base of the upper slabs is so narrow that it would not generate additional income even after a substantial increase in tax rates for high earners (over Rs 0.2 million per month).
“We cannot impose ridiculously high tax rates like 75% instead of 35% on high earners, who are very few at the top. On the other hand, the base of low-income people is very broad, which has an impact on income,” Asim said.
Now we are in a situation where the government does not want to impose a burden on low-income people.
However, if we do not raise taxes on low income earners, our impact on income would not turn positive, i.e. from the existing tax relief of Rs 47 billion to income generation of the salaried class.
However, the government must give tax relief to the low-wage class because the cost of living is so high, including inflation. We must at all costs relieve the lowest paid employees. Therefore, we are looking at different slices of the working class keeping in mind providing relief to wage earners, Asim added.
Copyright Business Recorder, 2022