Islamabad:
Paid individuals have paid 21% more in income tax in the first two months of this financial year, which contributes RS85 billion, which shows that the nominal reduction in the rates in the budget was insufficient to facilitate their financial burden.
Compared to RS70 billion in income tax payments during July-August for the last financial year, their contribution to around RS85 billion this year rose, government sources told Express Pakinomist. They paid approx. RS15 billion or 21% more, despite the fact that the government had nominally reduced their income tax rates in this year’s budget. Finance Minister Muhammad Aurangzeb acknowledged that the relief was minimal due to almost no fiscal space available.
21% The increase in income tax payments was, in addition to an already higher base from last year, as the contribution of the salary class jumped by more than half due to abnormal increases in their rates. The record high contributions from people who pay income tax on gross salaries without having luxury to adjust the expenses reduced a large life segment in the large segment significantly.
In the last financial year, employees paid RS555 billion in income taxes, 51% or RS188 billion more than the previous financial year. In the budget, the government reduced the marginal tax burden for people earning up to RS3.2 million annually, claiming it would give them an RS56 billion benefit. But compared to actual contributions, this nominal relief was as a decrease in the bucket.
Details showed that non-commercial sector employees paid RS41.5 billion in income tax in the last financial year, with RS8.5 billion or 26%. Employees in the corporate sector paid RS20 billion, also higher with RS5.2 billion or 26%. The spokesman for the Federal Board of Revenue (FBR), Dr. Najeeb Memon, did not answer a question regarding the rising burden of the paid persons despite a nominal cut in their rates.
Employees in provincial governments almost paid RS10.5 billion in taxes, an increase of RS626 million or 6%. Federal government paid RS7.6 billion, higher with RS552 million or 8%, according to preliminary figures prepared by FBR to July-August.
The government’s new tax on wealthy retirees has failed to provide higher income, the results showed. In the budget, the government was charged with income tax on pensions worth more than RS10 million annually. However, FBR collected only RS180 million in two months, indicating that the annual collections may be slightly above RS1 billion, the sources said.
Parliamentary committees are also currently investigating perks and wages for Securities and Exchange Commission of Pakistan (SECP) officials. The Office of Auditor for Pakistan (AGP) had raised initial objections over an abnormal increase in the SECP Commissioners’ Wages and the Chairman, which the SECP board approved on the management’s recommendation.
The Senate Standing Committee for Funding this week discussed the question in detail and opposed to giving wages to a commissioner against 17 heads. Senator Anusha Rahman of Pakistan Muslim League-Nawaz criticized giving 10% of the total salary as rent and an additional 10% as a use allowance to a commissioner. She also opposed club memberships.
This week, AGP presented details of revision objections in the standing committee, which showed that a commissioner was up to RS1.9 million annually due to security protection payments. In contrast
Rahman has introduced a private membership bill in the Senate to withdraw the SECP board powers to determine management salaries. She plans to move a similar bill to strip the State Bank of Pakistan Board of its Powers.
While the tax contribution of wages is constantly increasing, the government has failed to charge proper taxes from dealers. Several enforcement measures have already been reversed, including the largest that was to prohibit financial transactions from unjustified persons. This initiative was made ineffective after the government exempted most of the transactions from the new legislation and accepted cash deposits in banks as equal to digital transactions.
During the period, the government also increased the tax burden on the real estate sector by raising the rates of non-file and introducing a new category of late files in the budget. This has affected the growth of the sector in addition to other initiatives aimed at deterring investments in undeveloped countries.
In this budget, the government made adjustments to the withholding tax on the sale and purchase of plot. As a result, the government collected RS28 billion on the sale of plot, higher with 92% or RS13.4 billion. However, the collection on the purchase of properties was less than RS13 billion, decreased by RS2 billion or 12%.
