ISLAMABAD: Another round of talks between the IMF and Pakistan ended inconclusively.
In the negotiations, the parties could not agree on the imposition of new income tax rates on the salaried and non-salaried classes, and 18 percent sales tax on the health sector.
Sources say that in the negotiations, there was a discussion on imposing 45% income tax on salaried and non-salaried groups earning more than 4 lakh 67 thousand per month. is imposed.
However, the parties agreed to increase income tax on exporters, who have deposited only 86 billion rupees in tax this year, which is 280 percent less than the tax deposited by the salaried class. Has also shown willingness to do.
Sources say that the IMF and the government have not been able to agree on the income tax ceiling, integration of income tax rates for salaried and non-salaried classes and maximum income tax rate for individuals.
According to the sources, the IMF has decided to bring all the salaried, non-salaried and other income earners under a single category under a single slab and increase the income tax ceiling from 35%. Insisting on 45%, while the government representatives want the annual limit of taxable income to be increased to Rs 9 lakh, the government is not willing to raise the maximum income tax to 45%. Willing to show flexibility to maintain existing limit of Rs.6 lakh per annum.
According to one of the proposals under consideration, if the annual limit of income tax application is increased to 9 lakhs, then the tax rate on 100,000 monthly salary earners will increase from 2.5% to 7.5%, 133,000 Income tax on income will increase from 12.5% to 20%, income tax on 267,000 will increase from 22.5% to 30%.
The salaried class has paid Rs 325 billion in income tax during the 11 months of the current financial year, which is expected to be Rs 360 billion at the end of June. The sector will pay Rs 540 billion in taxes, the impact of which even a 30% increase in salaries will not be enough to offset.
Sources say that the IMF has asked Pakistan to present an alternative if it does not want to increase taxes on the salaried class, and another round of negotiations will begin soon.
An agreement has been reached between the IMF and the government to change the tax regime on exporters, according to which the current one percent income tax on exporters will be considered as a minimum, which will result in exporters being able to offset their costs and income. Relevant documents will have to be submitted, which will increase tax collections from exporters.
Sources say that the parties have not agreed to levy 18% sales tax on all other items including fertilizers, pesticides, beejon, medicine, solar panels, medical and surgical equipment. Not ready to tax.
