Income tax relief retained for all but top 70,000 earners

Islamabad: The government abolished tax breaks for Pakistan’s top 70,000 earners in its mini-budget on Tuesday, while retaining the tax concessions to the salaried work force.

The Finance Minister, Asad Umar, told the reporters that higher taxes would be charged only from people earning Rs200,000 or more a month, or in excess of Rs2.4 million a year. The other income groups were spared any reversal of the sweeping income tax relief introduced in the original budget for fiscal year 2018-19. But, the government enacted broader changes to the broader taxation structure. The number of tax slabs for the salaried workers was increased to seven, while non-salaried earners would be now be subjected to eight slabs.

As before, individuals earning Rs400,000 a year or less would pay no income tax. Those who fall in the second slab by earning Rs400,001-800,000 a year would pay a fixed tax of Rs1,000. Likewise, people in the third slab, who earn Rs800,001 to 1.2 million a year, would pay a flat rate of Rs2,000. Similarly, those who fall in the fourth slab by earning Rs1.2-Rs2.5 million a year would continue to pay five percent income tax on the amount exceeding Rs1.2 million. The mini-budget proposed increased taxes for individuals falling in the three high-income slabs.

For the fifth slab, the Pakistan Tehreek-i-Insaf government increased the income tax on annual income of Rs2.5 million-4 million to 15 percent from 10 percent, plus a fixed payment of Rs65,000. In the sixth slab, individuals earning Rs4-8 million a year would be charged a flat tax of Rs290,000 plus 20 percent of the amount exceeding Rs4 million. In the seventh slab, people making more than Rs8 million a year would pay a fixed amount of Rs1.09 million plus 25 percent of the amount exceeding Rs8 million.

The revised Finance Bill envisages similar hikes for the non-salaried earners with income falling within the top four slabs. In the fifth non-salaried slab, individuals earning Rs2.4-3 million a year would pay Rs60,000 plus 15 percent of the amount exceeding Rs2.4 million. In the sixth slab, where the taxable income ranges from Rs3-4 million, non-salaried workers would be charged Rs150,000 and 20 percent of the amount exceeding Rs3 million.

The non-salaried workers falling in the seventh slab by earning Rs4-5 million would pay Rs350,000 and 25 percent of the amount exceeding Rs4 million. In the eighth and top slab, non-salaried persons earning more than Rs5 million a year would pay Rs600,000 plus 29 percent of the amount exceeding Rs5 million.

AlamulKhabar Business