The government of Pakistan might withdraw income tax concessions that were granted to salaried individuals in 2017.

The government is considering this change for the upcoming budget (2019-2020) owing to the sharp 44% decline in the collection amount during July-March 2018/2019 (53.48 billion) as compared to that of the last fiscal year July-March 2017/2018 (95.15 billion).

“These changes brought about a substantial decrease in the withholding taxes collected through various government and private withholding agents,

the finance ministry said in a presentation in March 2019.

Revenue impact of the change remained Rs32.4 billion during the period from July 2018 to February 2019. It is estimated that total revenue loss on this account would be around Rs50 billion in the current financial year.”

Last year in April, the government had relieved salaried individuals through the Income Tax Amendment Ordinance of 2018.

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Individuals falling under the range of 400,000 PKR and 800,000 PKR were to pay a nominal income tax amount of 1,000 PKR annually. While those falling between 800,000 to Rs1.2 million PKR were to pay PKR 2,000 per year.

The amendment was applied by PML-N from July 1, 2018, and acted as a major relief for the salaried class.

However, after the amendment was applied, tax contribution by provincial, semi-government, and corporation employees declined 53 percent to Rs5.7 billion during the first nine months of the current fiscal year July-March 2018/2019.

Therefore, the IMF has recommended the government to retract tax exemptions from various individuals and sectors.

Moreover, IMF and Pakistan have agreed over the 39 month extended fund facility program to support Pakistan with its balance of payments issue.

The program has not been approved by IMF’s board yet, though.

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