Salaried taxpayers falling under higher tax brackets will now pay income tax at an increased rate, up from 20 percent to 30 percent and the highest bracket has been split into six more brackets with a progressive increase in tax rate, the Finance Bill showed.
A senior FBR official explained that the incidence of tax on higher income group increased in the new budget than their colleagues in the lower salaried class, adding that the total number of tax slabs had been increased from the current six to 12. According to officials, the incidence of income tax on middle income group has also been increased.
According to the Finance Bill (2013-14) issued here on Wednesday, where the taxable income does not exceed Rs 400,000, the rate of tax is 0%; where the taxable income exceeds Rs 400,000 but does not exceed Rs 500,000, the rate of tax would be 5% of the amount exceeding Rs 400,000; where the taxable income exceeds Rs 500,000 but does not exceed Rs 800,000, the rate of tax would be Rs 5,000 + 7.5% of the amount exceeding Rs 500,000; where the taxable income exceeds Rs 800,000 but does not exceed Rs 1,300,000, the rate of tax would be Rs 27,500 + 10% of the amount exceeding Rs 800,000; where the taxable income exceeds Rs 1,300,000 but does not exceed Rs 1,800,000, the rate of tax would be Rs 77,500 + 12.5% of the amount exceeding Rs 1,300,000; where the taxable income exceeds Rs 1,800,000 but does not exceed Rs 2,200,000, the rate of tax would be Rs 140,000 + 15% of the amount exceeding Rs 1,800,000; where the taxable income exceeds Rs 2,200,000 but does not exceed Rs 2,600,000, the rate of tax would be Rs 200,000 + 17.5% of the amount exceeding Rs 2,200,000; where the taxable income exceeds Rs 2,600,000 but does not exceed Rs 3,000,000, the rate of tax would be Rs 270,000 + 20% of the amount exceeding Rs 2,600,000; where the taxable income exceeds Rs 3,000,000 but does not exceed Rs 3,500,000, the rate of tax would be Rs 350,000 + 22.5% of the amount exceeding Rs 3,000,000; where the taxable income exceeds Rs 3,500,000 but does not exceed Rs 4,000,000, the rate of tax would be Rs 462,500 + 25% of the amount exceeding Rs 3,500,000; where the taxable income exceeds Rs 4,000,000 but does not exceed Rs 7,000,000, the rate of tax would be Rs 587,500 + 27.5% of the amount exceeding Rs 4,000,000 and where the taxable income exceeds Rs 7,000,000, the rate of tax would be Rs 1,412,500 + 30% of the amount exceeding Rs 7,000,000, Finance Bill added.