ISLAMABAD: A major relief has been provided to the lower income salaried class taxpayers by increasing the basic tax exemption threshold from Rs 600,000 to Rs 1,200,000 in annual salary income.
However, a token tax of Rs.100 has been imposed for the purposes of documentation, while maximum tax rate of 35 percent for salaried class has been reduced to 32.50 percent under the Finance Bill 2022.
A Rawalpindi based Income Tax Practitioner registered with Federal Board of Revenue, Khurram Shahzad, told this correspondent that there is no doubt that most of salaried individuals registered with FBR have serious financial issues on take-home salary after deduction of withholding income tax. But, still, the additional burden of tax has been imposed on this class, though on persons drawing higher bracket incomes. Khurram Shahzad was of the view that it would benefit the salaried class people and produce definitely a positive economic cycle, resulting in the more take-home salary for lower bracket income group.
At the moment, salaried individuals who earn between Rs.1/- to Rs.600,000/- annually are exempt from paying income tax to Federal Government subject to condition that his/ her income from salary is more than seventy five percent (75%)of his/ her taxable income. Those who fall into the next tax bracket, which has a maximum yearly income of Rs1,200,000/- and pays an additional 5% tax on any earnings above Rs600,000/- annually, he added.
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In the Budget 2022-2023 following new tax slabs have been introduced:
i) Where taxable income does not exceed Rs. 600,000 Tax =0
ii) Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000 Rs. 100
iii) Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000, 7% of the amount exceeding Rs. 1,200,000
iv) Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,600,000, Rs. 84,000 + 12.5% of the amount exceeding Rs. 2,400,000.
v) Where taxable income exceeds Rs. 3,600,000 but does not exceed Rs. 6,000,000, Rs. 234,000 + 17.5% of the amount exceeding Rs. 3,600,000
vi) Where taxable income exceeds Rs. 6,000,000 but does not exceed Rs. 12,000,000 Rs. 654,000 + 22.5% of the amount exceeding Rs. 6,000,000.
vii) Where taxable income exceeds Rs. 12,000,000, Rs. 2,004,000 + 32.5% of the amount exceeding Rs. 12,000,000.
Copyright Business Recorder, 2022
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