FBR revises tax rates for seven slabs, shares them with IMF

ISLAMABAD: The Federal Board of Revenue (FBR) has revised tax rates for seven slabs under Personal Income Tax (PIT) and shared with the IMF for removal of one major stumbling block in the way to striking staff-level agreement.

FBR Chairman Asim Ahmad told journalists Wednesday that the PIT slabs for salaried class would remain intact at seven percent but the rates might be adjusted. These rates, he said, were also shared with the IMF to bring them in line with the fund requirements.

However, he did not disclose the revised rates for different income slabs of the salaried class. Official sources said that the taxable ceiling up to Rs1.2 million would remain exempted from the payment of income tax but there would be just payment of a token amount of Rs100 where taxable income exceeds Rs600,000 but does not exceed Rs1,200,000.

The government is still trying to convince the IMF from any burden for those who are earning up to Rs0.2 million on a per month basis. Where taxable income exceeds Rs1,200,000 but does not exceed Rs2,400,000, the FBR proposed seven percent of tax on amount exceeding Rs1,200,000 on per annum through the Finance Bill 2022. The FBR wants to keep this rate unchanged at seven percent but the IMF was asking for increasing it up to 10 percent.

Now under the revised plan, the FBR may jack up its tax rate up to 10 percent on the amount exceeding Rs1,200,000. Where taxable ceiling exceeds Rs2,400,000 but does not exceed Rs3,600,000, the FBR has proposed Rs84,000 plus 12.5 percent of the amount exceeding Rs2,400,000. Now the FBR has revised its rate and shared with the IMF that this slab rate will be increased up to 17.5 percent.

Where taxable income exceeds Rs3,600,000 but does not exceed Rs6,000,000, the FBR has proposed Rs234,000 plus 17.5 percent of the amount exceeding Rs3,600,000. Now under the revised plan, the FBR has proposed tax rate of 20 percent for this slab.

Where taxable ceiling exceeds Rs6,000,000 but does not exceed Rs12,000,000, the FBR has proposed Rs654,000 plus 22.5 percent of the amount exceeding Rs6,000,000 under the Finance Bill 2022. Now under the revised plan, the revised rate for this slab has been proposed to jack it up to 25 percent.

On seventh slab, where the taxable income exceeds Rs12,000,000, the FBR has proposed Rs2,004,000 plus 32.5 percent of the amount exceeding Rs12,000,000. On pension funds, the sources said that the IMF wanted to bring all kinds of pensions payment and funds under the tax net.

The IMF had arranged a two-day workshop before the announcement of the budget and the FBR had convinced the IMF that it would not be feasible to bring pensioners into tax net during rising inflationary pressures. Finally, the IMF had agreed that the gratuity amount up to 50 percent of private sector would be taxed and its burden would be shared by the employer instead of the employees.