Salaried class likely to get some tax relief

ISLAMABAD: The Federal government is likely to provide income tax relief to the salaried class to alleviate financial pressure on salaried workers.

According to sources, Prime Minister Shehbaz Sharif has instructed the economic team to reassess the current income tax rates for those earning up to Rs100,000 per month.

In the most recent budget, the government had imposed a 2.5 percent income tax on monthly salaries within this bracket.

Through the Finance Bill 2024, the tax rate for salaried individuals earning between Rs50,000 to Rs100,000 per month has been doubled. The proposed increase would see the tax rate go up from 2.5 per cent to 5pc on all income earned above Rs50,000 in this bracket.

Meanwhile, employees earning a monthly income between Rs100,000 and Rs200,000 will pay 15pc instead of 12.2pc on everything above Rs100,000, along with a fixed sum of Rs30,000 instead of Rs15,000 per annum in the past.

The coalition government is mulling different options to reduce direct tax for those salaried individuals earning up to Rs100,000 per month.

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The reports suggest that this tax rate may be reduced or eliminated to alleviate financial pressure on salaried class

Implementing this tax relief could result in an estimated revenue shortfall of approximately Rs40 billion. It is anticipated that this deficit would be managed by reducing allocations to the Public Sector Development Programme (PSDP).

The sources said that the International Monetary Fund (IMF) would also be taken into confidence over the proposed relief.