ISLAMABAD: The government may restore threshold of taxable salary income to June 30, 2018 level in the budget 2019/2020 after facing Rs50 billion revenue loss in the current fiscal year and considering difficult economic situation in the year ahead.
Sources said reverting tax rates for salary persons to the June 30, 2018 position was under consideration for budget 2019/2020. However, no decision in this regard has been taken so far, the sources said.
The new threshold may be between Rs600,000 and Rs800,000 for tax exempt income and further tax slabs may be notified accordingly, the sources said.
In Finance Act, 2018 the rates of taxes upon salary income were considerably reduced and the threshold was increased from Rs.400,000 to Rs.1,200,000.
However, in order to ensure income tax return filing a token tax of Rs1,000/year was imposed on salary persons deriving income between Rs400,000 and Rs800,000 and tax of Rs2,000/year was imposed on persons deriving salary between Rs800,000 to Rs1,200,000.
These changes brought about a substantial decrease in the withholding taxes collected through various government and private withholding agents.
Revenue impact of this change remained Rs.32.4 billion during the period from July 2018 to February 2019, according to a report of FBR sent to ministry of finance.
It is estimated that total revenue loss on this account would be around Rs.50 billion in the current Financial Year, it added.