ISLAMABAD- Federal government is considering an exemption, in the upcomingbudget, from returns filing for salaried individuals who earn up toRs600,000 or Rs800,000 a year. Currently, the threshold is Rs400,000.

“The proposal for increasing exempt income limit for salaried persons hasbeen discussed at the FBR, “But, it is bothersome for the authorities asenhancing the limit will significantly reduce number of returns filing.”

The official said it is difficult to determine the impact quantum until theexact threshold is decided. Income group of up to Rs500,000 filed around200,000 returns, while that with earning of up to Rs750,000 filed around350,000 returns during the last tax year, he added. “We are actuallydevising a mechanism to enhance exempt income limit without compromising onreturn filing numbers.”

FBR receives an estimated 70 percent of total returns from salaried class,which is equivalent to more than 0.8 million of returns out of total 1.26million returns for the tax year 2017. Comparatively, Pakistan has aroundfour million national tax number holders.

Individuals whose taxable income for the year exceeds the maximum thresholdare required to file annual income tax returns along with wealth statementunder Section 114 of Income Tax Ordinance 2001.