FBR Advising to Tax on Pension to meet IMF target for FY26

FBR is advising and proposing to tax pensions to meet the IMF target for FY 26. FBR is advising that a person who is getting around the threshold of a 0.4 million per month pension should be subjected to a 2.5% tax. FBR is bringing as many proposals as they can. Due to that, the FBR could not meet the target of collecting taxes, which was agreed upon with the IMF. However, due to overambitious budget targets and overambitious tax targets, many people have filed complaints with the FTO. It is reported that the complaints were more than 200% compared to last year. 

People are filing cases in court as well, and it is reported that the FBR faces nearly 70,000 cases annually filed in court against the FBR. This is devastating news that so many people filed a case against the FBR. There is no doubt that, since last year, the FBR has been very desperate regarding tax collection; unnecessary notices and too many confused changes via SRO have slowed down the tax collection. It is reported that FBR is facing a shortfall of around 830 billion rupees in 10 months. It is expected that in May the FBR will be facing a shortfall. 

The shortfall in taxes is mostly due to the slowed-down economy and high inflation. Moreover, the 2.5% tax on pensions is a very small out-of-tax percentage; however, it can be a very significant contribution to the FBR, as they are also considering relaxing taxes on property purchases and sales to improve tax collection and increase purchases or sales. Moreover, the FBR is also trying to get IMF approval for decreasing taxes on the salaried class; however, the FBR said that only the salaried class will get relief this year, as the FBR has to accomplish its tax targets, which are agreed upon with the IMF.