Budget may do away with some income tax exemptions - AlJazeera Pk News

Technology

test banner

Breaking

Post Top Ad

Responsive Ads Here

Post Top Ad

Responsive Ads Here

Health

Saturday, May 29, 2021

Budget may do away with some income tax exemptions

Pakistan has shown willingness to take Rs30 billion worth personal income tax-related measures that may increase tax burden on some income groups but it seeks to protect the remaining exemptions in the next budget. During talks with the International Monetary Fund (IMF), the taxmen have proposed to protect majority of the income tax exemptions, which if withdrawn will carry significant financial implications for the salaried people, judges, government servants and pensioners, the finance ministry sources said. However, no final understanding has yet been reached with the IMF and a crucial meeting is expected next week, they added. The Federal Board of Revenue (FBR) has shared the initial working with the IMF. The Rs30 billion personal income tax measures mean that some financial burden will still be put on the salaried individuals, business income persons. In addition to this, there could be rationalisation and withdrawal of income tax exemptions on house loans, education expenses, health insurance and tax credit for investment in shares, the sources said. Read: No tax increase for salaried class in budget, says Tarin The government has already implemented Rs81 billion worth of corporate income tax related measures through a Presidential Ordinance. The sources said that half of the Rs30 billion tax measures are related to withdrawal of tax exemptions and about Rs10 billion pertain to adjustment of tax slabs for both salaried persons and non-salaried business income. For instance, the income tax exemption available on flying allowance to pilots, engineers and navigators of the army, PIA, CAA submarine allowance to naval officers could be withdrawn. Similarly, the total allowances received by pilots of any Pakistani airlines may also be taxed at normal rates, said the sources. The 25% tax credit that the teachers and researchers get may also be withdrawn, according to the sources. At present, the tax rate on profit on debt on Bahbood certificates, pensioners may be rationalised, said the sources. The income tax exemption on the capital gains on disposal of immovable property acquired or allotted to ex-servicemen and serving personal of the armed forces or ex-employees or serving personnel could be withdrawn. There might be Rs190 billion worth of sales tax measures in the budget, which are also half than what Pakistan had committed at the time of revival of the $6 billion programme. Finance Minister Shaukat Tarin also seemed softening his stance on tax measures. While speaking at a Private TV channel on Saturday, Tarin said that some of sales tax exemptions might be withdrawn. This is contrary to his earlier position, when he had said that no additional revenue measures will be taken in the next fiscal year. The sources said that the government was still trying to protect many income tax exemptions and was in process to convince the IMF that the time was not right for such measures due to the prevailing economic conditions. They said that the government was not inclined to withdraw tax exemptions available on payments from profit on debt payable to a non-resident person and payments to individuals on account of profit on debt earned from a debt instrument. The 5% reduced tax rate facility for Grade-20 to 22 bureaucrats on compulsory monetisation of car facility may continue. The government may not withdraw income tax exemption available to a technical, professional, scientific adviser or consultant or senior management staff by institutions of the Aga Khan Development Network, said the sources. The allowances paid to the government servants serving abroad may also continue, said the sources. The income tax exemption on payment of internal security allowance, mess allowance, SSG allowance, Northern Areas compensatory allowance, special pay for Northern Areas and height allowance to the armed forces personnel may also continue, said the sources. Read more: Businessmen propose tax and duty cut in budget Similarly, any profit on debt derived from foreign currency accounts held with authorised banks in Pakistan, or certificate of investment issued by investment banks may also remain exempted, said the sources. The currency accounts scheme introduced by the State Bank of Pakistan (SBP) for citizen of Pakistan residing abroad and remitting foreign exchange is also proposed to remain exempted, said the sources. Taxpayers receiving dividend income from corporate agricultural enterprises may continue to enjoy their current status, subject to the endorsement by the IMF, said the sources. The sources said that income of residents of former FATA/PATA is also proposed to be protected from the tax, although it has significant revenue implication of Rs5 billion, said the sources. The government has proposed Rs5.829 trillion tax target for the next fiscal year, which is about Rs134 billion less than what the IMF had suggested.

from Pakistan News, Latest News Pakistan, Pakistan Headline | eTribune https://ift.tt/3c3OQpK
https://ift.tt/eA8V8J

No comments:

Post a Comment

Post Top Ad

Responsive Ads Here