*ISLAMABAD: *The federal government is considering giving a massive taxrelief worth Rs67 billion to the salaried class in the upcoming budget, asit plans to cut income tax rates for every income bracket with an aim tobring down the highest slab rate to 20%.

Besides this government is also planning to have salary increase between 10to 20% for the government servants.

The wage-boosting measure will see a 90% cut in tax burden of the lowestincome group and around 43% for the highest income group, said officials inthe finance ministry.

Cumulatively, the salaried class’s take-home pay will increase by Rs67billion at their current income levels, which will be a major relief tothem ahead of upcoming general elections, they added.

The plan also includes increasing the tax exemption threshold from thecurrent Rs400,000 to Rs500,000 annual income, they added.

So far, numerous meetings have taken place between the Federal Board ofRevenue (FBR) and the Prime Minister’s Office to finalise the relief plan,they added. The plan, however, may see some obstacles, as there were alsoconcerns about the impact of the massive relief on the government’srevenues and its already narrow income tax base, said the sources.

The PML-N government has announced to give fiscal year 2018-19 budget onApril 27th – almost five weeks before its five-year constitutional termcomes to an end. This will be the sixth budget that the present NationalAssembly will approve.

The Rs67-billion relief is still lower than what Prime Minister ShahidKhaqan Abbasi desired during the in-house meetings, said the sources. PMAbbasi’s plan talks about Rs100 billion relief to the salaried class, thesources said. The extremely narrow tax base remains a concern for allstakeholders. Less than half a percentage point of the total population or1.261 million individuals and companies filed their income tax returns fortax year 2017, according to the new Active Taxpayers List.

The prime minister is of the view that low tax rates would encourage peopleto come in the net.

The number of income tax return filers from all main sectors of the economyhas contracted in the past five years and the only exception is thesalaried class. In the salaried class, the return filers increased from242,153 in 2013 to 436,812 by February 15 of this year, a net addition of232,368 or 96% in five years.

Under the law, it is legally binding on every citizen of the country tofile income tax return by September 30 every year provided he has a taxableannual income of Rs400,000 or more.

The sources said that the PM desired to increase the income tax exemptionthreshold from the current Rs400,000 to Rs1.2 million. Additionally, the PMalso wanted that the highest income tax rate for the salaried class may belowered from 35% to only 15%. The total cost of the PM’s proposal wasroughly Rs100 billion.

Sources said that the FBR did not endorse this proposal and came up with analternate workable plan. According to the FBR’s proposal, the income taxexemption threshold has been suggested to be at Rs500,000, the officialssaid.