ISLAMABAD: The Federal Board of Revenue (FBR) is working on three proposals — raising exemption limit, reducing tax rate for individual taxpayers and introduction of simplified return form.
Prime Minister Shahid Khaqan Abbasi has directed the revenue board to finalise their proposals in these three areas at the earliest.
“We have already held several meetings on these proposals”, the official said, adding it will be finalised soon.
At the outset, to provide maximum relief to small taxpayers, FBR is working on a proposal to enhance the basic income tax exemption limit to a minimum of Rs500,000, from the existing Rs400,000 for the salaried class in the budget for 2018-19.
In 2012-13, the exemption threshold was increased to Rs400,000 from Rs350,000. Since then, salary was increased many times which lead to increasing tax liability of small taxpayers, especially the salaried class.
The tax official said it is under consideration to give maximum relief to the salaried class in lower brackets.
Various options are under consideration regarding the slashing of tax slabs for individual taxpayers. Currently, the highest income tax slab of 35 per cent was applicable to income of individual taxpayers.
For corporate taxpayers, the tax slab was lowered to 30pc in a period of five years.
According to the FBR official, prime minister wants to reduce this rate to a minimum of 15pc. However, the official said, no final decision was taken on this issue. “We are considering various options on this issue”, the official said.
He added that it has been decided in principle to bring down the tax rate for individual taxpayers.
Currently, the income tax returns form is very cumbersome, involving several annexures for filing online.
The tax official said the PM has asked FBR to develop a single page for income tax returns.
The demand for a single-page returns form also came from other stakeholders including tax reforms commission as well.
In tax year 2017, only 1.2 million people filed income tax returns.
Most of the people did not file their tax returns due to a difficult return form and issues in FBR’s online filing system.
Published in Dawn, February 4th, 2018
Dear visitor, the comments section is undergoing an overhaul and will return soon.