The International Monetary Fund (IMF) has asked Pakistan to provide a written plan for relief in electricity bills amidst ongoing nationwide protests.
The caretaker government’s decision to seek approval from the IMF before announcing any consumer relief led to a federal cabinet meeting on Tuesday, chaired by interim Prime Minister Anwaarul Haq Kakar.
Despite discussing options, the meeting concluded without unveiling any measures. The Power Division had shared proposals with authorities, but the strict conditions of the IMF loan necessitated involving the lender first.
Pakistan’s $3 billion loan agreement with the IMF in July involved adhering to stringent financial discipline. The current surge in electricity rates, approved by the previous government, is reflected in bills.
According to Geo, Finance Minister Shamshad Akhtar held a virtual meeting with IMF representative Esther Perez, discussing relief measures and the ongoing protests. While the Pakistani team submitted various relief proposals, the IMF officials requested a written plan, expected to be shared soon.
Additionally, the Federal Board of Revenue (FBR) engaged with the IMF on tax collection in July, with plans for further discussions in the coming days.
Finance Minister Ishaq Dar presented a comprehensive budget proposal of Rs14.46 trillion for the fiscal year 2023-24, emphasising an expansionary approach. One of the key highlights of the proposal was a substantial increase in the salaries of government employees, aimed at providing much-needed relief.
In order to ensure that the burden on the salaried class remained unchanged, the coalition government decided not to make any alterations to the existing tax slabs, which were approved in the previous year’s Finance Bill of 2022.
Outlined below are the tax slabs for different income brackets:
1. Income below Rs600,000 per year (Rs50,000 per month):
– No tax will be deducted.
2. Income between Rs600,000 to Rs1.2 million per year (Rs50,000 to Rs100,000 per month):
– Tax will be levied at a rate of 2.5 per cent on the amount exceeding Rs600,000.
3. Income between Rs1.2 million to Rs2.4 million per year (Rs100,000 to Rs200,000 per month):
– Tax will be levied at a rate of Rs15,000 plus 12.5 per cent on the amount exceeding Rs1.2 million.
4. Income between Rs2.4 million to Rs3.6 million per year (Rs200,000 to Rs300,000 per month):
– Tax will be levied at a rate of Rs165,000 plus 20 per cent on the amount exceeding Rs2.4 million.
5. Income between Rs3.6 million to Rs6 million per year (Rs300,000 to Rs500,000 per month):
– Tax will be levied at a rate of Rs405,000 plus 25 per cent on the amount exceeding Rs3.6 million.
6. Income between Rs6 million to Rs12 million per year (Rs500,000 to 1,000,000 per month):
– Tax will be levied at a rate of Rs1.005 million plus 32.5 per cent on the amount exceeding Rs6 million.
7. Income exceeding Rs12 million per year (exceeding Rs1,000,000 per month):
– Tax will be levied at a rate of Rs2.955 million plus 35 per cent on the amount exceeding Rs12 million.
These tax slabs have been carefully designed to ensure a fair and balanced approach to income taxation, considering various income brackets. By maintaining consistency with the previous year’s tax slabs, the government aims to alleviate the burden on the salaried class while still generating the necessary revenue for public welfare and development initiatives.
Overall, the budget proposal presented by Finance Minister Ishaq Dar reflects the government’s commitment to supporting government employees and maintaining a progressive tax system that promotes economic growth and fairness.
Tax slabs
Annual income
Monthly income
Tax rate
Slab 1
Below Rs600,000
Below Rs50,000
No tax deducted
Slab 2
Rs600,000 – Rs1.2 million
Rs50,000 – Rs100,000
2.5 per cent of the amount exceeding Rs600,000
Slab 3
Rs1.2 million – Rs2.4 million
Rs100,000 – Rs200,000
Rs15,000 + 12.5 per cent of the amount exceeding Rs1.2 million
Slab 4
Rs2.4 million – Rs3.6 million
Rs200,000 – Rs300,000
Rs165,000 + 20 per cent of the amount exceeding Rs2.4 million
Slab 5
Rs3.6 million – Rs6 million
Rs300,000 – Rs500,000
Rs405,000 + 25 per cent of the amount exceeding Rs3.6 million
Slab 6
Rs6 million – Rs12 million
Rs500,000 – Rs1,000,000
Rs1.005 million + 32.5 per cent of the amount exceeding Rs6 million
Slab 7
Above Rs12 million
Above Rs1,000,000
Rs2.955 million + 35 per cent of the amount exceeding Rs12 million
The prices of petroleum products are expected to decrease starting from May 16, as the coalition government intends to provide some relief to the distressed public amidst the severe economic crisis and record inflation.
According to reports in local media, petrol price will see a reduction of Rs10 per litre for the rest of May.
It has been reported that the Oil and Gas Regulatory Authority (OGRA) has recommended a decrease in the prices of petroleum products. Based on these reports, the price of petrol may be reduced by Rs10 per litre, while the price of diesel is anticipated to decrease by Rs8 per litre.
OGRA has submitted a summary to the government, and Finance Minister Ishaq Dar and other officials will seek the input of Prime Minister Shehbaz Sharif on the recommendations. The final decision will be announced today.
The revised prices of petroleum products for the upcoming two weeks will be implemented after midnight on May 15.
Earlier this month, the federal government announced a reduction of Rs5 per litre in the price of diesel, while the price of petrol remained unchanged. Presently, petrol is being sold at Rs282, HSD at Rs288, kerosene oil at Rs176.07, and light diesel oil at Rs164.68 per litre.
