Islamabad:

The federal government is likely to improve the threshold for the taxable annual income from RS600,000 in the upcoming budget, provided it ensures approval from the International Monetary Fund (IMF).

In addition, the government also mullets over the introduction of taxes on retirees that deduct significant amounts.

According to the Federal Board of Revenue (FBR), the proposed relief for the financial year 2025-26 is limited to lower income plates without recommendations under consideration for individuals earning high wages.

According to sources, three proposals are currently being investigated to extend relief to the grade in the next financial year.

Such a proposal suggests to increase the taxable annual income limit from RS600,000 to RS800,000. However, a final decision will only be made after further consultation.

The government also plans to simplify the form for tax return and revise the turnover tax rate.

Furthermore, a relief measure for employees who earn between RS600,000 and RS1.2 million are also under review.

Sources added that pensioners who receive significant pensions are also under consideration with a proposal to charge a 5 percent tax on annual pensions of RS800,000; 10 percent of RS800,000 to RS1.5 million; 12 percent of RS1.5 million for RS2 million; 15 percent of RS2 million to RS3 million; and 20 percent on pensions exceeding RS3 million.

However, these remain preliminary recommendations and final decisions will be made after a detailed evaluation and consultation process.