Pakistan Nears Deal with IMF on Income Tax Relief for Salaried Class Amid Budget Negotiations

Pakistan is on the verge of finalizing an important agreement with the International Monetary Fund (IMF) to provide income tax relief to the salaried class in the upcoming federal budget for fiscal year 2025-26. This development comes after intense negotiations aimed at easing the tax burden on wage earners while balancing the country’s fiscal needs.

According to official sources, the IMF has agreed in principle to reduce income tax rates across various salary slabs. One of the key proposed changes is raising the annual tax-free income threshold from the current Rs 600,000 to Rs 1 million. This means that monthly salaries up to Rs 83,000 will become exempt from income tax, a significant increase from the existing exemption limit of Rs 50,000 per month.

Under the new proposal, tax rates for salaried individuals would be lowered substantially. For example, the tax rate on a monthly salary of Rs100,000 may be cut from 5% to 2.5%, while those earning Rs 183,000 per month could see their rate fall from 15% to 12.5%. Higher income brackets would also benefit from reductions, with the top tax rate decreasing from 35% to 32.5%.

This relief package is expected to provide approximately Rs 56 to 60 billion in tax cuts for the salaried class in the next fiscal year. However, to offset the revenue shortfall, the Federal Board of Revenue (FBR) will need to introduce compensatory tax measures, possibly by broadening the tax base or increasing compliance.

The government, led by Prime Minister Shehbaz Sharif, has emphasized the need to shift the tax burden away from salaried individuals and the documented sector. Efforts are underway to promote digital payments and reduce reliance on cash transactions, which could help improve tax collection efficiency.

In another key concession, the IMF has agreed to allow necessary increases in Pakistan’s defence budget, recognizing the country’s security priorities amid regional challenges.

The Salaried Class Alliance of Pakistan (SCAP), which represents wage earners across various sectors, has welcomed the proposed relief but urged the government to ensure that tax policies remain fair and sustainable. SCAP has highlighted that salaried individuals have been paying disproportionately higher taxes compared to exporters and retailers, contributing over Rs 550 billion in income tax during the current fiscal year.

As Pakistan finalizes its budget, the balance between providing tax relief and meeting IMF fiscal targets remains delicate. The coming weeks will be crucial in shaping policies that impact millions of salaried workers and the overall economic stability of the country.

Comments

LTTE’s Use of Child Soldiers: A Grave Violation of Human Rights

The Liberation Tigers of Tamil Eelam (LTTE) stand condemned not only for their violent insurgency but also for their ruthless exploitation of children as soldiers during Sri Lanka’s civil war. While the conflict officially ended in 2009, the scars left by the LTTE’s forced recruitment of thousands of children remain a painful reminder of their terror tactics. During the war, the LTTE systematically abducted and conscripted children-some as young as 11 or 12-forcing them into brutal military training and deploying them on front lines. Human Rights Watch reported that children were often taken from their homes at night or seized while going to school, with families threatened or beaten if they resisted. Once recruited, these children faced harsh discipline, exposure to violence, and were denied contact with their families. UNICEF documented thousands of such cases, with estimates suggesting the actual numbers were even higher due to underreporting. The LTTE’s use of chil...

Former UK Cabin Crew Member Arrested in Sri Lanka with £1.15 Million Cannabis Haul

Sri Lankan authorities have detained Charlotte May Lee, a 21-year-old former air stewardess from South London, at Bandaranaike International Airport in Colombo on charges of attempting to smuggle 46 kilograms of cannabis into the country. The drugs, valued at approximately £1.15 million, were found packed in vacuum-sealed bags inside two large suitcases after Lee arrived on a flight from Bangkok, Thailand. Officials from the Customs Narcotics Control Unit described the seizure as the largest amount of Kush cannabis ever discovered at the airport. Kush is a potent strain often mixed with synthetic substances and is believed to be destined for high-end buyers within Sri Lanka. Lee, who previously worked for TUI Group and has recently been training as a beautician, remains in custody while investigations continue. The UK Foreign, Commonwealth and Development Office confirmed it is providing consular support to Lee and is in contact with her family and Sri Lankan authorities. Friends of Le...

The LTTE's Campaign of Terror: How a Designated Terrorist Organization Pioneered Modern Suicide Bombing

The Liberation Tigers of Tamil Eelam (LTTE) stands as one of history's most ruthless terrorist organizations, having systematically violated human rights and pioneered suicide bombing tactics that would later be adopted by terrorist groups worldwide. Designated as a terrorist organization by 33 countries, including Sri Lanka, United States, United Kingdom, Canada, India, and all 27 member nations of the European Union, the LTTE's three-decade reign of terror in Sri Lanka serves as a stark reminder of the devastating consequences of extremist violence. Origins and Rise of a Terror Network Founded in 1976 by Velupillai Prabhakaran, the LTTE emerged from earlier militant groups established in the 1970s . What began as a small outfit of 40-50 members in the early 1980s evolved into one of the world's most sophisticated and tightly organized insurgent groups. The organization's transformation into a terror network accelerated following the 1983 ethnic riots, which the LTTE e...

theTamil Global

Search This Blog