The Pakistani government, led by Prime Minister Shehbaz Sharif, is exploring options to provide income tax relief to the salaried class. This move comes in response to increasing pressure from political and public dissent, including a sit-in by Jamaat-e-Islami in Rawalpindi protesting high electricity bills and taxes.
Key Developments:
- Task Assignment: Prime Minister Sharif has tasked the economic team with evaluating various options to alleviate the tax burden on salaried individuals. This effort is part of the coalition government’s broader agenda to address rising utility costs and financial strain on the public.
- Relief Plans: The government is considering relief measures for those earning up to Rs100,000 per month, with a potential total relief package estimated at Rs40 billion. Discussions are underway on possibly reallocating funds from the development budget to support this initiative.
- IMF Consultation: The International Monetary Fund (IMF) will be consulted regarding the proposed tax relief measures to ensure alignment with existing agreements and fiscal targets.
- Budget and Tax Changes: The National Assembly recently approved a national budget with a challenging tax revenue target of 13 trillion rupees for the fiscal year starting July 1. This includes a significant increase in direct and indirect taxes, with notable hikes in taxes on textiles, leather products, mobile phones, and capital gains from real estate. The budget also outlines increased non-tax revenue, including petroleum levies.
- Inflation Data: The Consumer Price Index (CPI)-based inflation was recorded at 11.1% year-on-year in July 2024, a decrease from 12.6% in June 2024 and 28.3% in July 2023, according to the Pakistan Bureau of Statistics (PBS).
The government’s focus on providing tax relief aims to balance the fiscal demands with public welfare, amid challenging economic conditions and rising inflation.
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