Salaried class to suffer as govt mulls reversing income tax slabs

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  • Tax exemptions for individuals earning Rs400,000 to Rs1.2m per annum likely to be withdrawn

ISLAMABAD: In an effort to increase the tax revenue in line with the International Monetary Fund (IMF) requirements, the Pakistan Tehreek-e-Insaf government, apart from introducing new taxes, is likely to end tax exemptions to salaried individuals earning Rs400,001 to Rs1.2 million per annum.

According to sources, the Ministry of Finance, while preparing the next budget, is considering to re-impose the income tax slabs of 2017-18 that included income tax rates from 2pc to 35pc plus a fixed amount of tax.

In case the tax slabs are reversed, the government will be collecting an additional revenue of Rs100 billion, which was lost due to exemptions introduced by the previous government in April 2018.

While presenting the last budget, the Pakistan Muslim League-Nawaz government had introduced income tax exemptions to those earning Rs400,001 to Rs1.2 million per annum. However, it later added a fixed amount of Rs1,000 for individuals earning Rs400,001 to Rs800,000 and Rs2,000 for the annual income of Rs800,001 to Rs1.2 million per annum. The fixed tax of Rs1,000 and Rs2,000 was introduced to avoid reducing the number of filers (1.26 million).

By increasing the income tax exemption slab from Rs400,000 to Rs1.2 million per annum, the previous government had eroded 521,597 income tax return filers from the tax base, a 42pc of the existing tax base, according to the calculations of the Federal Board of Revenue.

The PTI government, later, through a supplementary budget in September 2018, had maintained the exemptions for individuals drawing a yearly income of Rs400,001 to Rs1.2 million while introducing some changes in the remaining slabs of income tax.

According to sources, the finance ministry has started consultation to reintroduce the previous income tax range of 2pc to 15pc for individuals of Rs400,001 to Rs1.2 million per annum income, as it may add over Rs35 billion to the FBR’s tax revenue.

In case the previous income tax regime is restored, the income tax rates for people earning from Rs1.2 million to Rs2.4 million would be 10pc to 17.5pc in addition to a fixed amount. The tax for this slab was reduced by the previous government to 5pc, causing a reduction of over Rs20 billion in the FBR’s income.

In the previous tax slab, the tax for the income category of Rs2.4 million to Rs4.8 million was in the range of 17.5pc to 27.5pc, in addition to a fixed amount of tax. The PML-N government in its last budget had reduced the tax for this slab to only 10pc.

As per the tax slab of 2017-18, for those earning over Rs4.8 million annually, the income tax rate was in the range of 27.5pc to 35pc plus Rs6 million tax for the highest slab. The tax for this slab was reduced by the previous government to only 15pc, causing a hit of around Rs40 billion to FBR.

It may be recalled that prior to the Finance Act, 2018, the minimum threshold of taxable income for individuals was Rs400,000, whereas the maximum tax rate was 30pc and 35pc for salaried and non-salaried individuals respectively. Through the finance act, rates for both salaried and non-salaried individuals were unified and the minimum threshold of taxable income was increased to Rs1,200,000. However, a nominal tax rate of Rs1,000 was imposed on income between Rs400,000 to Rs800,000 and Rs2,000 on income between Rs800,000 to Rs1,200,000.

41 COMMENTS

  1. It was implemented in 4 years by PML N, I have paid it then from my pay. PML N govt canceled it before going out from power.

    At least I think we have to pay taxes like West if we want progress like them.

    Standing with my Honourable PM.

    • It is kind of foolish to compare with the west. When they have high taxes, see what they return to their citizens in terms of healthcare, education, civic amenities, in totality being Welfare States. Here the last drop of juice is squeezed from the citizens with no return.

    • It is blind faith that has brought Pakistan to where it is today!. Imran is a good man, but Imran cannot be everywhere and check on everything. Ppl surrounding him r the same old with same shitty policies! Musharraf was a great and honest leader too till the politicians he trusted took him down and he became the worst of the lot. People were promised by IK immediate remedies for their pain & suffering, they are now being prescribed antibiotics over a 6 months course for which they have to pay themselves.
      IK needs to set his priorities right – planting trees, encroachment policies, months of court cases against PPP and PMLN, Plans for Dams, these are good BUT there is not actual achievements till rather the making of committees to start the process and we all know what happens with committees !!!

  2. The tax is rate same as was during 2013-2018 till mini budget of Miftah PML-N. They changed the tax rates just few months before their tenure in order to attract salaried class for voting purpose.

    • Then y cudn’t he attract? Y result not in their favour? Sorry, argument unjustified. No one seems to be convinced!

  3. The biggest mistake I made in my life, is vote to this incompetent government … #UselessPTI, #uselessIK …

  4. Imran Khan Golden Words , ” Rolayyon Ga main in Ko ” . Difference between a Small Man and a oxford graduate. Even Chai walla has more economic sense.

  5. The 1st Time relaxation was given to salaried class via exemptions introduced by the previous government in April 2018.

    Throught PML-N political career they did one best things for salaried ones. Now such government is intend to &/or going to discontinue the same. Which is totally unfavorable action for salaried person.

    Why the government not recover the looted amount of money from concern ones.

    I am feeling , why we/I vote to PTI…. is it changed.

  6. I think if we include income tax, general sales tax and fuel surcharge… Then each white collared pakistani is paying 50% on his income which is too much by any standards. And what do we get in return…. Almost nil social security, health servicrs or quality of life.

  7. What do we get and avail after paying such high rate of income tax and sales tax 17 % on goods, and 14 % on services sales tax and approx 6.5% custom duty on imported goods and excise tax, property tax,????? System of maximum earning of government is going on. Such withdrawn is un acceptable by salaried tax payers, PTI government should increased employment opportunities through increased in investment in business in Pakistan, eliminate corrupt officials in Government services immediately, modify and amend un nessarry and painful and laws which increase corrouption in Tax system of Pakistan Pakistan ZINDABAD,

  8. Minimum tax should be on 1000000 or more amount yearly under them is totally injustice if more than 1000000 per year i am also tax payer please reforms in tax. To avoid poor peoples injustice.

  9. All you are a bunch of hypocrites, All I see is people whining about how this is injustice to lower class if you think the rich should pay more then the poor then you are wrong because that is what makes investors run away from a certain field they don’t want to oppressed just as much as you don’t want to be. So stop whining about this Nawaz-Imran Drama and get a hold of yourself deal with it. Surely just don’t vote for anyone but if you are gonna vote and then act like your vote is special then your loosing your ego get a hold of it before it destroys you. BTW this is the most biast article I have heard clearly downgrading government.

  10. I think the govt should take some practical steps to be just to the public. For instance:
    1. No tax deduction on withdrawals from a bank account of a filer.
    2. Witholding tax on school fees should be withdrawn for filers. If a citizen is already filing a tax return then why do you want to deduct witholding tax. Because govt never refunds any.
    3. There should be no witholding tax deducted from mobile or ptcl bills for the filer.
    4. Behbood certificates should be emphatically made tax exempt and zakat exempt.
    5. There must be a system of refunding tax as well. Every time you apply for a tax refund the fbr theives are sitting there and they will only approve it if you give them 20%.
    6. If imran can finish the corruption in the tax dept and the police dept. This country will be different and very prosperous witjin days.

    • 1. Before levying taxes and encroachment policies Imran should think of Relief Packages .
      2. What is the time line for the recovery of the Looted Maal”- Black Money . Was it not more than the budget of Pakistan ?
      3. Who audits the auditors ? Everyone knows NAB has a history of corruption

  11. Excellent decision.
    PMLN made us all fool by decreasing the Tax slabs in the last months of their Power.
    Previous tax slabs were ok.

  12. The 1st Time relaxation was given to salaried class via exemptions introduced by the previous government in April 2018.

    PML-N in throughout political career, only they did one best things for salaried ones. Now such government is intend to &/or going to discontinue the same. Which is totally unfavorable action for salaried person.
    Why the government not recover the looted amount of money from concern ones.
    I am feeling, why we/I vote to PTI…. is it changed. “ Ye hai Naya Pakistan”

    Despite of paying tax no return is being given to citizens in term of healthcare, education, civic amenities, in totality being Welfare States

  13. Rabbits caught under headlights. Same men occupying the corridors of power. Same feudalistic policies. Gag the poor. Push the middle class down the gutter.
    The hard working middle class will pay up to 35pc on the income whereas the corrupt can go scot-free on their embezzlement by paying only 5pc.
    RIP Tabdeeli
    RIP Tehreek e Insat

  14. Rabbits caught under headlights. Same men occupying the corridors of power. Same feudalistic policies. Gag the poor. Push the middle class down the gutter.
    The hard working middle class will pay up to 35pc on the income whereas the corrupt can go scot-free on their embezzlement by paying only 5pc.
    RIP Tabdeeli
    RIP Tehreek e Insaf

  15. What is the authenticity of this article? Let’s wait for the budget to come. May be it is just the mechanition of the rival parties. Some times many proposals are made by the planners but what is adopted is only known when at the actual time. It is immature thinking to curse the government on the basis of a newspaper article and lamenting for voting.

  16. So the salaried class should pay taxes while these people will live for free off of them. May God’s curses descend on them.

  17. They are just trying to put load on salaried class because they know,salaried person can’t do anything so squeeze them,what about the landlords,corrupt politicians and govt employees?

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