Prime Minister Shehbaz Sharif has approved a set of proposals aimed at reducing the tax burden on Pakistan’s salaried class, including the possible abolition of the super tax and a reduction in income tax rates for higher earners.
The proposals were discussed during a meeting chaired by the prime minister on Saturday, where officials reviewed ways to provide relief to taxpayers while maintaining fiscal discipline. Authorities were directed to further refine the proposals in consultation with private sector experts before formally presenting them to the IMF during upcoming negotiations.
According to the plan, the government is considering abolishing the super tax for wealthy individuals and the corporate sector. In addition, the maximum income tax rate for the highest salaried bracket could be reduced from 35% to 30% , while the relevant income slab may also be increased.
Officials also discussed potential relief measures for other sectors of the economy. These include reducing the 1% deemed income tax on the property sector, removing the 1% advance income tax on exports, and possibly abolishing the capital value tax on foreign assets. However, these changes would also depend on the IMF’s approval as Pakistan continues to work within the framework of its ongoing economic program.
Earlier proposals to reduce sales tax and corporate tax rates were also considered, but officials indicated that such steps may be delayed for now due to fiscal constraints.
Recent data from the FBR shows that salaried individuals paid around Rs315 billion in income tax during the July-January period of the current fiscal year. This represents an increase of more than 10% compared to the same period last year.
Economists have repeatedly pointed out that Pakistan’s direct tax collection relies heavily on salaried individuals, while sectors such as retail and real estate contribute comparatively less to the tax base. The imbalance has often been cited as one of the structural challenges in the country’s taxation system.
