The federal government is reportedly contemplating brining a huge tax relief to the salaried class in the upcoming budget. It has been reported that the tax relief will be worth Rs67 billion as the government plans to cut income tax rates for every income bracket with an aim to bringing the highest tax slab rate to 20%.
So far the proposal is just in the discussion phase as the effects of the measure will need to be noted before it is passed. Since the highest number of tax returns come from the salaried class, this exemption will take a huge hit at the government revenue.
If the measure is put into effect, the salaries class’s take-home pay will increase by Rs67 billion at their current income levels. It is also proposed in the plan to increase the tax exemption threshold from the current Rs400,000 to Rs500,000 annual income.
The Federal Board of Revenue (FBR) is in discussion with the Prime Minister’s Office to finalize the relief plan before the upcoming budget which is due to be announced on April 27th. The fiscal year 2018-19 budget will be the sixth budget that the present National Assembly will approve before the general elections.
The number of income tax return filers from all main sectors of the economy has contracted in the past five years and the only exception is the salaried class. In the salaried class, the return filers increased from 242,153 in 2013 to 436,812 by February 15 of this year, a net addition of 232,368 or 96% in five years.
Under the law, it is legally binding on every citizen of the country to file income tax return by September 30 every year provided he has a taxable annual income of Rs400,000 or more.