ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday issued circular regarding the relief given to salaried class persons in the current fiscal year budget.
According to the notification, the persons with an annual salary up to Rs400,000 are exempted from tax. In addition to this, non-salaried and salaried individuals have to pay to Rs1,000 if the taxable income exceeds Rs400,000 but does not exceed Rs800,000.
Similarly, where the taxable income exceeds Rs0.8 million but does not exceed Rs1.2 million, Rs2, 000 taxes will be paid while 5 per cent of the income will be deducted as a tax for salaried persons earning Rs1.2 million to 2.4 million annually.
Those who are earning Rs2.4 million to Rs4.8 million per annum will have to pay Rs60,000 in addition to the 5 per cent of the amount. Moreover, those earning a salary more than Rs4.8 million annually will pay a fixed tax of Rs300,000 in addition to 15 per cent of the salary.
The Pakistan Muslim League-Nawaz (PML-N) government introduced these reforms in the current fiscal year budget. Officials at tax department said that Pakistan Tax Bar and Karachi Bar Association had written a letter to issue the circular regarding the amendment made in income tax.
The department issues the circular every year in July, however, tax officials could not issue this time a caretaker setup was in place.
The notification further stated that separate tax rates have been provided for AOP’s through the Finance Act, 2018. Meanwhile, the rate of tax for companies other than banking companies has been further reduced by one per cent each year for five years. The FBR will also reduce the rate of tax to 25 per cent by 2023, which is currently 29 per cent.
Furthermore, the rate of tax for a small company has also been reduced by one per cent each year for five years. The rate will be 20 per cent in 2023 from 24 per cent in 2019.
The notification further read that super tax will be mitigated to one per cent in coming years for banking companies and other persons.
A new section 236HA has been inserted in finance bill 2018 which states that every person selling petroleum products to a petrol pump operator or distributor, where such operator or distributor is not allowed a commission or discount, shall collect tax on ex-depot sale price of such products at 0.5 per cent for filers and one per cent for non-filers. “Hence, where the petrol pump operator is allowed a commission or discount, only tax under section 156A shall be collected and tax under section 236HA shall not be collected. In case the petrol pump operator or distributor is not allowed commission or discount, tax under section 156A shall not be collected but tax under section 236HA shall be collected. Tax deducted under the newly inserted section is a final tax.”