The World Bank (WB) has withdrawn its recommendation regarding the imposition of tax on those with a monthly income of Rs50,000 or less.
The global lender said this recommendation was based on the 2019 data that needed to be updated in the light of recent inflation and market conditions.
A World Bank spokesperson said the lender had withdrawn its recommendation on taxing monthly salaries of Rs50,000 or below.
It said it needed to update its suggestion in the light of recent inflation and labour market conditions.
“The World Bank definitely does not recommend any reduction in the current nominal ceiling,” the spokesperson said.
Also Read: Pakistan advised to impose taxes on individuals making Rs 50,000 or less
The World Bank does not recommend any specific new level of income tax exemption, it added.
It further said the Bank has proposed a fresh survey to assess the level of exemption.
On October 4, the WB had recommended the imposition of taxes on individuals earning Rs50,000 or less per month. The proposal, if approved by the cabinet, could have reshaped the country's tax policies.
The World Bank's suggestion was outlined in the Pakistan Development Outlook report, aiming to enhance Islamabad's fiscal sustainability. One of the key recommendations was the expansion of the tax base to encompass previously untaxed sectors.
Among the suggested measures was a progressive tax rate system, where individuals with a monthly income of Rs500,000 would be subjected to a 35% tax rate. This proposal was expected to generate additional revenue for the government.
Furthermore, the World Bank had urged the federal government to curtail spending in areas that fell within the purview of the provinces. This move was aimed at improving financial discipline and accountability in service delivery.
