Salaried individuals

Tax laws in Pakistan do not provide any tax relief to salaried individuals. The only amendment that has been brought in the tax law regarding the income from salary was increasing the tax exemption threshold to Rs400,000 from Rs350,000 in the financial year 2012-13. It is a fact that the government collects 100 percent tax from this sector since the tax on an individual’s monthly salary is deducted at source by the employer. It is also proposed that at least medical and travelling expenses should be allowed in deductions.

Also, the FBR has made it mandatory for all salaried individuals having taxable income to file their income tax returns through e-filing. This move has been taken in order to increase the number of tax returns. A number of tax experts condemned this move. A major reason is that many people don’t know to file tax return. The e-filing system must be made more accessible and convenient in consultation with IT experts so that every citizen can file independently. In order to grow the tax culture, it is suggested that taxable income for salaried individuals should be increased to Rs1 million per year. Wealth statement should only be required if total taxable income is more than Rs4 million per year. It is hoped that these incentives may be announced in the 2017-2018 budget.

Nisar Ahmed

Karachi