However, achieving the target of Rs14.2 trillion in the next budget will be a challenge for budget makers as the target for the next fiscal year will be based on unstable conditions, especially as the tax shortfall is increasing in meeting the reduced tax collection target of Rs12.33 trillion.

The IMF and the FBR held tough talks on Friday night, and the fund s staff gave broad permission in principle to reduce tax rates in various slabs of the salaried class.

The IMF has estimated that this reduction will provide relief of Rs56-60 billion in the next fiscal year, so the FBR will have to propose tax measures in income tax to fill this gap.

A senior official of the negotiating team confirmed to The News on Saturday that we have proposed some tax measures to satisfy the IMF to provide relief to the salaried class in the upcoming budget to be presented on June 10.

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Senior officials said that the proposed reduction in tax slabs for the salaried class has not yet been fully determined, but the FBR has proposed to impose only one percent tax on the first slab, i.e., those with an annual income of Rs600,000 to Rs1,200,000, which is lower than the current rate of 5 percent.

The IMF is pushing for a 1.5 percent tax collection from the first slab, so if a 1.5 percent tax is imposed, individuals will have to pay Rs9,000 in tax to the national exchequer. For the remaining slabs, a 2.5 percent reduction in each income slab of the salaried class is proposed, and the maximum slab rate will be reduced from 35 percent to 32.5 percent. However, the exact cost has not yet been calculated and there has been no consensus between the IMF and the top officials of the FBR.