The mission also recommended an increase in the existing reduced sales tax rates to the standard 18%, except for some essential goods, the sources added. At present, the salaried class income tax rates range from the low of 2.5% to the high of 35%, depending on the annual income. In case of deleting two to three tax slabs, the tax rates for the people earning from Rs200,000 to Rs300,000 would see a sharp increase, they added. A significant tax base comprising unsalaried individuals and sole proprietors including retailers are out of the income tax net. Sources said that the IMF also suggested that Pakistan should end the preferential sales tax rates being administered under the 8th Schedule of the Sales Tax Act.
