The government of Pakistan has changed the minimum taxable income from Rs 1.2 million to Rs 0.4 million a year. 0.4 million a year means that per month those earning Rs 33,333 will now have to pay tax.
Just a week ago, the government provided a huge relief to the salaried individuals by raising the taxable income to Rs 1.2 million a year. But by taking this step it means that 44% of the people or 0.5 million individuals will not have to pay the taxes.
Now as per a suggestion by Federal Board of Revenue, the government has taken a U-turn and changed the minimum taxable income to Rs 0.4 million a year. This is the same taxable income as was before the government announced the relief.
So yes it’s like you give people a gift and then you take it back without any remorse.
The income tax will be charged as per the salary.
- Those earning in between Rs 400,001 to Rs 800,000 a year will have to pay Rs 1,000 tax
- Those earning in between Rs800,001 to Rs1,200,000 a year will have to pay Rs 2,000 tax
Before the taxable income was changed, Miftah Ismael said while announcing the budget that, “Tax rates on individuals have been lowered. Complete tax exemption has been given to people who earn up to Rs 1.2 million a year or Rs 0.1 million a month. This exemption limit, which was previously Rs 0.4 million a year, has been increased three times to Rs 1.2 million a year. Tax will be levied at the rate of 5 percent for the income between 0.2 and 0.4 million monthly.”
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Adding, People earning above 0.4 million monthly will be taxed at the rate of 15 percent. In Pakistan, the highest tax burden was on the salaried middle-class which include teachers, doctors, lawyers, nurses, accountants. Reduced tax rates will significantly lower tax burden on this class.”
Announcing a relief to the people of Pakistan and then taking it back, is just an unacceptable deed on part of the government. Any government should make a decision, think about it thoroughly and then implement it.