The Federal Board of Revenue (FBR) is preparing two significant budget proposals, including the taxation of high pensions and an increase in the current income tax exemption threshold for the next fiscal year (2025-26), Business Recorder reported.
Both proposals will be presented to the prime minister for approval, with the FBR already working on them.
The first proposal suggests imposing a nominal tax on pensions exceeding a certain high threshold. Initially, this would target Grade-22 retired officials and others in similar positions.
For example, individuals receiving a monthly pension of Rs400,000 or more (Rs4.8 million annually) could face a nominal tax rate of 2.5% on their pension.
The proposal aimed to target those enjoying a luxurious lifestyle while drawing high pensions, but it would not apply to pensioners with lower amounts.
A former FBR Member Tax Policy explained that the decision to tax pensions above a specific threshold would be a political one, affecting retired members of the judiciary, bureaucracy, and senior armed forces officials.
The second proposal involves raising the current income tax exemption threshold of Rs. 600,000 under the Income Tax Ordinance, 2001.
This measure would provide significant relief to the general public by increasing the exemption threshold for income tax.
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