Salaried, non-salaried taxpayers to cough up Rs225b

Budget increases tax rates in both categories, minimum threshold maintained at Rs600,000

ISLAMABAD:

The federal government increased the tax rate for both salaried and non-salaried taxpayers in the federal budget for the next financial year, placing a cumulative burden of Rs75 billion on the salaried person, Rs150 billion on the non-salaried individuals.

The budget proposed a maximum tax rate of 35% for the salaried persons, and 45% for non-salaried individuals. The minimum threshold of Rs50,000 monthly income had been maintained for both the categories, while the number of tax slabs would also remain at 6.

The salaried people in the first tax slab with the income of up to 600,000 per annum or Rs50,000 per month had been exempted from income tax. In the second tax slab, the income tax for those earning between 600,000 and 1.2 million per annum would be 5%.

This 5% tax, according to the Finance Bill, would be charged on the amount after deducting Rs600,000 from the total annual income. Hence, in this category, the monthly income tax would increase from Rs1,250 per month during the current fiscal year to Rs2,500 per month in the next fiscal year.

Under the third slab, which covered individuals, having the annual income of Rs1.2 million to Rs2.2 million, a fixed tax of Rs30,000 would be levied along with 15% income tax. The tax payment in this category would increase from the current Rs11,667 to Rs15,000 per month.

In the fourth tax slab, which covered individuals having the annual income of Rs2.2 million to Rs3.2 million, the fixed tax would be Rs180,000, besides 25% tax on the remaining amount after deducting Rs2.2 million. Overall, the per-month tax in this slab would increase from Rs28,770 to Rs35,834.

In the fourth tax slab, which covered individuals having the annual income of Rs3.2 million to Rs4.1 million, the fixed tax would be Rs430,000, besides 30% tax on the remaining amount after deducting Rs3.2 million. Overall, the per-month tax in this slab would increase from Rs47,408 to Rs53,333.

While for the sixth tax slab, the top-most category comprising individuals having the annual salary income of more than Rs4.1 million, the fixed tax of Rs700,000 would be levied in addition to 35% income tax on the remaining amount after deducting Rs4.1 million from the total salary.

According to the Finance Bill, the number of tax slabs for non-salaried business individual taxpayers has been increased to six, while the tax exemption limit for this category had also been maintained at the income of up to Rs600,000.

In the next tax slab, income tax of those earning Rs600,000-1.2 million per year had been increased to 15% on the amount over and above Rs600,000. Under the third slab, of annual income of Rs1.2-1.6 million, Rs90,000 fixed tax and 20% tax on the income above Rs1.2 million would be levied.

Similarly, Rs170,000 fixed tax and 30% tax on amount more than Rs1.6 million had been proposed for the individuals earning between Rs1.6-3.2 million per annum. And Rs650,000 fixed tax and 40% tax on amount above Rs3.2 million would be levied on those earning between Rs3.2-5.6 million per annum.

In the final sixth slab, which covered individuals taxpayers earning more than Rs5.6 million annually, a fixed tax of Rs1.61 million would be levied. In addition, the income tax at a rate of 45% would also be charged in the remaining amount after deducting Rs5.6 million.

Load Next Story