Islamabad:
The wage class paid the amazing income tax of RS331 billion in the eight months of the current fiscal year, which is 1,350% more than the taxes paid by retailers, but it is not yet enough for the Government to seek the relief of the International Monetary Fund (IMF) for the marginalized segment.
Total income tax contributions by salaried persons during the July-February period of this fiscal year were RS120 billion or 56% higher than RS211 billion raised during the same period of the last fiscal year.
The government of Prime Minister Shehbaz Sharif had signed up for the additional RS75 billion collection of the salaried class for the full fiscal year 2024-25. The figure is already higher RS120 billion and there are still four months at the end of the fiscal year.
In the last year, the salaried class paid RS368 billion in taxes. But despite this exhausting charge for salaried persons, who pay taxes on gross income without adjusting expenses, the government did not occupy the issue of reducing this load with the IMF during recently held conversations.
There were no discussions with the IMF to reduce the tax burden of the salaried class, the sources said. When contacted, FBR spokesman, Dr. Najeb Memon, said the government would review taxes on wage class in the next budget year.
Unlike RS331 billion paid by salaried persons, retailers, mostly unregistered, contributed only from RS23 billion due to the income tax of their purchases. The amount of the tax that the merchants paid under section 236-H was 1,350% less than the taxes paid by salaried persons.
The wholesalers and distributors also paid RS16 billion to retain taxes in eight months and, although almost half of them were not registered with the FBR, the sources said.
In the budget, the Government had imposed 2.5% retain taxes on merchants in the hope that this will force them to come to the tax system.
The increase in the rate helped raise RS12 billion more than merchants, but the planned objective could not be achieved. The merchants transmitted the cost of the additional tax to the final consumers.
The government’s tajir scheme to bring 10 million merchants on the network also failed badly and now has stopped talking about it. The Government was supposed to collect RS50 billion of retailers under the scheme, but ended up collecting peanuts.
The sources said the FBR admitted to the IMF that merchants and jewelry were the two hard nuts to break. The FBR also confessed before the IMF that, due to the main design defects, the Tajir Dost scheme had failed.
The IMF was informed that the big merchants also prevented the little ones from joining the scheme and, as a result, could not expand the scheme to 43 cities. The FBR plan to bring a minimum of 10 million retailers on the network had failed, it was told to the IMF.
The sources said that the Minister of Finance, Muhammad Aurengzeb, had asked the FBR to begin the year to review the taxes to the salaried class with a goal of providing a certain relief. However, such discussions with the IMF did not take place.
Last June, the Government greatly increased the tax burden of salaried people by reducing the number of slabs, which put an abnormal burden on the average and medium income groups. The maximum 35% rate is now unfairly charged in RS500,000 monthly income and a 10% surcharge is also imposed, which carries the total tax rate to 38.5% for the highest slab.
When the government did not feel the pain of salaried people, it tried to negotiate with the IMF to reduce the tax burden of the real estate sector. The IMF did not accept the government’s demand and, for now, has maintained unchanged fees.
The details showed that the employees of the non -corporate sector paid RS141 billion income taxes this year, which is higher in RS42 billion or 43%. The employees of the corporate sector paid RS101 billion in Income Tax, also higher in RS37 billion or 56%.
The employees of the provincial governments paid RS57 billion, RS28 billion or 96%. Federal Government employees paid RS34 billion, again at RS14 billion or 66%.
For the current fiscal year, the IMF has granted RS12.97 billion fiscal objectives to FBR, which has already suffered a deficit of 605 billion rupees in eight months despite raising RS331 billion salaried people.
For the month of March, the fiscal objective is RS1,220 billion that the FBR will lose again for a wide margin. Until Sunday, the FBR had raised RS515 billion, leaving it with a gigantic task of generating RS704 billion this week. Friday will be the last business day before Eid holidays.
