ISLAMABAD, May 5: The government has decided to withdraw 55 income tax exemptions from the next financial year, officials sources told Dawn.

The International Monetary Fund has asked the Pakistan government for elimination of at least 55 income tax rebates, concessions and non-standard exemptions. This one of IMF’s conditions for releasing the next tranche of the Poverty Reduction and Growth Facility.

These exemptions are likely to be announced in the Finance Bill of 2002, the officials said.

According to the officials, the most likely exemptions to be withdrawn are from the salary of the expatriate employees of the Shaukat Khanum hospital, allowances of government employees posted abroad, commutation of pension, gratuity, entertainment allowance to senior officers, senior post allowance to government servants, orderly allowance to government servants, and compensatory allowance payable by the Pakistani missions abroad.

Some other exemptions to be withdrawn are from the personal staff subsidy, ad hoc relief to civil servants, salary of Khasadars, pension of dependents of public servants, on free provision of gas, water and electricity to federal and provincial ministers without limit and up to 10 per cent in case of other employees, and income of trusts for welfare of forces/civilian servants.

In case of judges, exemptions will be withdrawn on free rent, place of resident or cash allowance in lieu thereof, monthly allowance of Rs1,500 rent free accommodation and official car. For non-residents, the exemption to be withdrawn included interest on non-residents, interest on non-residents for export letter of credit, interest on foreign loans, interest on non- resident, profit derived by non-resident on Islamic mode of financing and interest income of non-resident Pakistanis.

Similarly, the exemption will be abolished on income from FEBCs, interest income of foreign banks, income of non-residents from securities, income of textbook boards (business income), income of sports boards (business income), donations to certain institutions, income of mutual funds and income of modaraba.

Also, the exemption will be abolished on capital gains on sale of share of public sector corporations auctioned by the Privatization Commission and capital gain on sale of public companies by foreign institutional investor as approved by the federal government.

The exemptions to be withdrawn included medical expenditure by individuals, federal education fee expended under the FEF scheme, income of Liaquat National Hospital Association, Karachi: royalty, technical services; share of partner from firm’s income under clauses 139, donations paid to the Liaquat National Hospital Association, Karachi; income of Pakistan Council of Scientific and Industrial Research; income of Institute of Engineers (income from commercial activities will be taxed) and income of private power projects set up after July 1, 1988 (Beneficiaries will not be affected).