NA approves revised salary income tax

ISLAMABAD: The National Assembly has approved revised income tax slabs for the salaried class amid pressure from the IMF to generate incremental revenue. 

According to the amended finance bill, there will be no tax on an annual income of Rs 0.6 million, whereas the annual income of Rs 0.6 to 1.2 million will be taxed at 2.5 percent of the amount exceeding Rs 0.6 million.

Those earning Rs 1.2 million to Rs 2.4 million will have to pay a fixed tax of Rs 15,000 plus 12.5 percent of the amount exceeding Rs 1.2 million. Where taxable income exceeds Rs 2.4 million but does not exceed Rs 3.6 million the tax rate is Rs 165,000 plus 20 percent of the amount exceeding Rs 2.4 million.

Those earning between Rs 3.6 million to Rs 6 million will have to pay Rs 405,000 plus 25 percent of the amount exceeding Rs 3.6 million. 

For income between Rs 6 million to Rs 12 million, the tax will be Rs 10.05 million plus 32.5 percent of the amount exceeding Rs 6 million. 

Where taxable income exceeds Rs 12 million, the tax is Rs 2.955 million plus 35 percent of the amount exceeding Rs 12 million.

Those who are earning upto Rs200,000 per month will see the tax rate go down compared to the last fiscal year. However, individuals earning more than that will be subjected to increased rates in comparison to the previous fiscal year. Salaried persons earning in excess of Rs500,000 per month will experience the highest tax rate hikes. 

The revised slabs comes as a disappoint to the salaried class that were earlier given an exemption form tax for salary income upto Rs100,000 per month.