ISLAMABAD: The Federal Bureau of Revenue (FBR) has proposed to bring the number of income tax slabs from 17 to 5 which would allow a relief of Rs1000 to Rs15000 to the salaried class, Geo News reported Wednesday.
In its recommendation, FBR has also proposed to increase the limit of annual income exempted from tax from Rs350,000 to Rs400,000.
According to the recommendation, the first slab corresponds to Rs400,000 annually which is exempted from tax. Second slab is Rs400,000 to Rs750,000 on which 5 percent income tax is proposed to be collected.
This means the taxable income out of an annual income of Rs450,000 will be equal to Rs50,000 and a 5 percent income tax (Rs2,500) would be charged on Rs50,000. In the same case in FY 2011-12, the tax amount would come to Rs11,000.
If the annual income is Rs500,000, the amount of tax would be equal to Rs5,000 which in the current fiscal gets calculated to be Rs17,500. And a person earning a per annum income of Rs600,000 would instead of paying Rs27,000 in tax in the current fiscal would only pay Rs10,000.
Similarly, on an annual income of Rs750,000 an amount of Rs17,500 would be collected as tax, down from Rs45,000 in the current financial year.
For the first time it has been proposed to make an exemption of Rs400,000 applicable for all slabs