Increase in IT slabs for individuals proposed

Senate Standing Committee on Finance has proposed an increase in income tax slabs for individuals in its recommendations to the government for implementation from the next fiscal year. A day after, the meeting requested the Federal Board of Revenue (FBR) to revise the income tax slabs for individuals’ income including salaried class above Rs. 1.2 million. The government meeting presided over by Senator Farooq H Naek recommended with consensus to increase the income tax slabs to 10 percent, 15 percent and 25 percent for those whose yearly taxable income exceeds the brackets of Rs. 1.2 million, Rs. 2.4 million and Rs. 4.8 million respectively.

The government’s proposal was to impose 5 percent tax on those individuals whose taxable income exceeds Rs. 1.2 million, 10 percent for those whose taxable income exceeds Rs. 2.4 million and 15 percent on those whose taxable income exceeds Rs. 4.8 million brackets.

The FBR officials stated that as per their working, the new proposal will increase their tax by Rs. 20 billion and overall impact of the income tax package announced in the tax amnesty scheme on revenue collection will contract to Rs. 70 billion from Rs. 90 billion. The committee accepted the FBR proposal of collecting nominal income tax of Rs. 1,000 up to the income of Rs. 800,000 and Rs. 2,000 on taxable income of Rs. 1.2 million.

Members Inland Revenue-Policy Dr. Muhammad Iqbal said that a token tax was proposed on taxable income of Rs. 1.2 million to protect the number of tax returns filers in the tax net. The committee also recommended to the government to increase the threshold of withholding tax on cash withdrawal from existing Rs. 50,000 to Rs. 100,000.

The committee wants the government to also increase the limit to inquire about source of income on remittances under the tax amnesty scheme to Rs. 17.5 million from proposed Rs. 10 million in the original scheme. However, the finance committee turned down a majority of proposals put forward by various sectors for decrease in sales tax and customs and excise duties.