Govt may tilt tax system to favour the poor.

ISLAMABAD, May 08, 2010 (Balochistan Times): The government might increase the limit of taxable income to shift the onus of taxes from the lower income tax group. Quoting sources of Federal Board of Revenue a private news channel stated that government may increase the limit of taxable income by 50 per cent for the salaried persons and a 100 per cent for the business class in the upcoming budget. The sources also stated that authorities are considering two proposals to provide relief to the inflation stricken masses. The first proposal for the salaried class suggests that individuals with annual income less than Rs 300,000 be exempted from the income tax. The current taxable income is above Rs 200,000, they added. The second proposal suggests, reducing the income tax rate for the next three slabs instead of increasing the taxable income limit. The idea is to shift the tax burden from lower income groups to higher ones said a senior official of the Federal Board of Revenue while talking to this news channel. He said that the next slabs tax rate would either be increased marginally or it will be merged with the next one to offset the financial impact of providing relief to the lowest category. For taxing incomes, taxpayers have been divided into twenty categories. The highest category consists of those people whose annual income is more than Rs 8.6 million. These people would pay a 20 per cent income tax. So far, no proposal to increase income tax rate for the highest slab is under consideration, said officials. For the non-salaried class, the taxable income is over Rs 100,000. According to the budget proposal the taxable income for the non-salaried class would be above Rs 200,000, said sources. Finance Bill 2009 states that employees with an annual income between Rs 200,000 and Rs 250,000 pays a 0.5 per cent income tax. The third category consists of those employees whose annual income is more than Rs 250,000 but up to Rs 350,000. This class pays 0.75 per cent income tax. Employees earning between Rs 350,000 and Rs 400,000 pay a 1.5 per cent income tax.

(THROUGH ASIA PULSE)