The Federal Board of Revenue (FBR) has proposed tax exemptions for low and middle-income salaried individuals in the upcoming federal budget, according to sources within the FBR. However, the implementation of these relief measures will require approval from the International Monetary Fund (IMF).

A key recommendation in the proposal is to exempt individuals whose annual taxable income exceeds Rs. 600,000 from income tax obligations. Additionally, salaried individuals earning more than Rs. 50,000 per month may receive partial relief if the IMF agrees to the proposal.

FBR sources have indicated that the focus of tax relief will be limited to adjustments in the lower income tax slabs, with no relief currently being proposed for individuals in high-income brackets. The proposals, specifically prepared for the fiscal year 2025-26 budget, aim to ease the tax burden on lower and middle-income earners who have been significantly affected by economic challenges.

As part of its broader reform package, the FBR is also advocating for a simplification of the income tax return filing process to improve compliance and ease administrative burdens for taxpayers.

All proposed changes will be presented to Prime Minister Shehbaz Sharif for final review before the budget is finalized. Sources emphasized that while these relief measures are being seriously considered, their implementation remains contingent upon the IMF’s approval, given Pakistan’s ongoing fiscal reform program under the Fund’s supervision.

The proposal comes at a time when the government is trying to balance fiscal consolidation requirements with the need to provide relief to citizens facing economic pressures. The IMF has previously expressed concerns about Pakistan’s tax collection efforts, making the approval of tax exemptions a potentially complex negotiation.