FBR Reassures Income Tax Exemptions For Low-Income Earners

In recent announcement delivered by the Federal Board of Revenue (FBR), the authoritative officials have contradicted the claims of discontinuing income tax exemptions on a monthly income of Rs50,000. They assured that these exemptions will stay in place until further notices from the IMF.

What Does IMF Say About Income Tax Collection

The International Monetary Fund (IMF) has asserted to impose more taxes on rich and elite class of Pakistan. In this prospective, the Chairperson of the IMF has also stated a video statement. She has urged Pakistani rulers to adopt a moderate and frugal lifestyle to save money. Likewise, FBR is currently engaged in negotiations with the International Monetary Fund (IMF). Expectedly, during these discussions, IMF will direct some new taxes and reconsidering taxes. However, thankfully, IMF stuck the stance to relieve under privileged class of Pakistan. For this, the IMF officials have advised FBR that the low-income people will not be on the table for new tax imposition.

Who are Underprivileged in Tax Range

People earning less than 50 thousand rupees or $500 come among the underprivileged class. The tax exemption for breadwinners earning Rs50,000 monthly will remain with no effect. So, the exemption for those earning Rs600,000 annually will not be reverted.

Future Chances of Tax Exemptions

The IMF has no aim to impose tax on low income yielders. So, there are no ongoing considerations or proposals for withdrawing this tax exemption. Hence, the World Bank (WB) has also not put forward any recommendations to lower the existing threshold of Rs600,000.

Similarly, exemption of tax will be intact upon the agricultural sector will not be the case. Therefore, the imposition of taxes on income derived from the agricultural sector falls under the control of the provincial governments and is not within the purview of the FBR.

SBP Maintains Key Policy Rate at 22%

The State Bank of Pakistan (SBP) has also obliged the IMF orders. Though, it has also asserted its decision to maintain the key policy rate at 22% in the latest monetary policy committee (MPC) meeting. This move came into action after the approval of the wake of an IMF review. So, amidst various economic factors influencing the decision, the interest rate will likely be so. The MPC recognized that headline inflation had risen in September 2023 as anticipated. However, the central bank projected a decline in inflation for October. Following, it is expected it to continue on a downward trajectory, especially in the latter half of the fiscal year.

The SBP’s decision to maintain the key policy rate is regarded as a positive step towards achieving price stability. It will also be helpful for sustainable economic growth. It is also a sign of the central bank’s commitment to its inflation targeting framework.

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