ISLAMABAD: The rate of tax has been increased up to 20 percent from 15 percent on profit on debt through Finance Bill, 2019.
The government has proposed increase in tax rates on profit on debt through Finance Bill 2019 as part of budget 2019/2020.
The tax rate has been increased to 15 percent from 10 percent where profit on debt does not exceed Rs5,000,000.
The tax rate has been increased to 17.5 percent from 12.5 percent where profit on debt exceeds Rs5,000,000 but does not exceed Rs25,000,000.
The tax rate has been increased to 20 percent from 15 percent where profit on debt exceeds Rs25,000,000 but does not exceed Rs36,000,000.
Presently the profit on debt is taxed separately and is not part of the income in normal tax regime.
According to the Federal Board of Revenue (FBR) the existing tax rates are 10 percent, 12.5 percent and 15 percent for slabs up to five million rupees, between five million to twenty five million rupees and above twenty five million rupees respectively.
The rates are being revised wherein tax rates for profit on debt not exceeding Rs 5 million shall be increased from 10 percent to 15 percent, between Rs 5 and 25 million tax rates shall be increased from 12.5 percent to 17.5 percent and from 25 to 36 million tax rates are being increased from 15 percent to 20 percent.
The rate of advance withholding tax on payment of profit on debt is also being enhanced from 10 percent to 15 percent.
Furthermore, the separate rates mentioned above would be applicable for profit on debt up to Rs.36 million and for amounts exceeding Rs. 36 million the profit on debt will be made part of the total income and taxed at normal rates.