ISLAMABAD: The government abolished tax breaks for Pakistan's top 70,000 earners in its mini-budget yesterday, but otherwise left the salaried work force alone. Finance Minister Asad Umar told reporters that higher taxes would be charged only to people earning Rs200,000 or more a month, or in excess of Rs2.4 million a year.
Other income groups were spared any reversal of the sweeping income tax relief introduced in the original budget for fiscal year 2018-19.
However, the government enacted broader changes to the broader taxation structure. The number of tax slabs for 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 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 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.
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.
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