|Reduction of income tax slabs on cards for Budget 2021-22: FBR|
Islamabad: The Federal Board of Revenue (FBR) is planning to imitate United Kingdom (UK)’s model and decrease the number of slabs for personal income tax from 11 to five during the upcoming budget 2021-22, according to a news story published on April 16.
These reforms in personal income tax slabs are being introduced in line with the International Monetary Fund (IMF) programme – to reduce the tax payment burden from the lower-income ceiling earning PKR 600,000 per annum and the tax incidence will rise for those earning over PKR 300,000 per month. As per the IMF staff report, the reforms will simplify the system and support labour formalization.
As per the sources, FBR estimates to collect income tax revenue of PKR 125 billion in the fiscal year 2020-21, however, with this development, the revenue can go up to PKR 150 billion in the upcoming fiscal year.
In addition to the reduction of the size of the current income slabs, the IMF reforms will also slash the current tax credits and allowances by half (except for senior citizens, disabled and Zakat receipts), launch special procedures for small taxpayers and bring more taxpayers to the net.
Presently, the board is working out various options for tax slabs structures for both business and salaried individuals