In response to the International Monetary Fund’s (IMF) recommendation to eliminate relief provided on June 10, the coalition government on Friday announced amended tax deduction rules for the salaried class.

The News reported on Saturday that the Federal Board of Revenue’s (FBR) target for tax collection for the fiscal year 2022–23 has been raised to Rs7,470 billion, an increase of Rs466 billion.

In order to raise the collection, the government had to take harsh measures, such as boosting the tax rates for high earners to raise Rs120 billion for fighting poverty and Rs35 billion for the salaried class.

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For the upcoming fiscal year 2022–2023, the government imposed a 10 per cent super tax on 13 high-earning sectors, which will cost Rs80 billion in income.

The government increased the Personal Income Tax (PIT) by Rs80 billion by abolishing tax relief worth Rs47 billion and then increasing the tax amount by Rs35 billion. As a result, the FBR was expected to collect Rs235 billion from the salaried class in the upcoming budget, up from Rs200 billion in the preceding fiscal year.

The PTI-led government had promised to raise the tax revenue by Rs335 billion by increasing the tax slab rates for the salaried class, but the PDM-led coalition government persuaded the IMF to accept Rs100 billion less than the amount the PTI-led government had promised to raise.

The government suggested a tax rate of 2.5 per cent for the salaried class for income brackets of Rs50,000 to Rs100,000. The proposed tax rate increased to 12.5 per cent for income earners who make between Rs100,000 and Rs300,000 per month.

The FBR proposed raising the tax rate from 17.5 per cent to 20 per cent in cases where the taxable income is greater than Rs3,600,000 but not greater than Rs6,000,000. The FBR tax rate is proposed to rise from 22.5 per cent to 25 per cent where the taxable income exceeds Rs6,000,000 but does not exceed Rs12,000,000.

The FBR will charge a tax amount of Rs2,004,000 plus 32.5 per cent of the amount exceeding Rs12,000,000 on an annual basis where the taxable income exceeds Rs12,000,000. The FBR suggested a 35 per cent tax rate for the aforementioned income.