On Tuesday, Pakistan announced a “broad agreement” on the budget for the upcoming year with the International Monetary Fund (IMF), which saw the budget’s size increase to Rs 9.9 trillion.
The government also agreed to reinstate the tax on individuals earning up to Rs 100,000 and the petroleum levy as of July 1.
The IMF insisted that the yearly tax exemption ceiling remains at Rs 600,000 from the previous year, and the government was forced to accede to their request. A tax exemption of up to Rs 1.2 million per year was recommended in the budget.
However, Ismail gave in to the IMF’s demand on Tuesday and agreed to apply a 2.5 percent income tax on anyone who earns between Rs 600,000 and Rs 1.2 million annually. Even so, the rate is still just half of what people in this salary range are now paying.
The tax rates for the higher income tax brackets will also increase dramatically. With the central bank, the IMF will now finalize the objectives for net foreign assets, net domestic assets, net international reserves, and current account deficit. The Memorandum for Economic and Financial Policies (MEFP) was expected by the finance ministry on Monday.
