Category: National

Pakistan’s salaried class unhappy over new tax changes

ISLAMABAD: The salaried class in Pakistan is in shock over the recent changes announced by the government and revert its decision to exempt income of salaried persons up to Rs1.2 million.

The government on June 10, 2022 presented the federal budget 2022/2023 announced major tax relief for salaried class by enhancing threshold from Rs600,000 to Rs1.2 million. Besides, the government also proposed to reduce the number of income slabs.

Through the Finance Bill, 2022 the government on June 10, 2022 proposed the following rates of tax on salary income:

Salary income slabs and tax rates proposed through Finance Bill, 2022:

S#	Taxable Income	Rate of Tax
(1)	(2)	(3)
1.	Where taxable income does not exceed Rs. 600,000	0
2.	Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000	Rs. 100
3.	Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000	7% of the amount exceeding Rs. 1,200,000
4.	Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,600,000	Rs. 84,000 + 12.5% of the amount exceeding Rs. 2,400,000
5.	Where taxable income exceeds Rs. 3,600,000 but does not exceed Rs. 6,000,000	Rs. 234,000 + 17.5% of the amount exceeding Rs. 3,600,000
6.	Where taxable income exceeds Rs. 6,000,000 but does not exceed Rs. 12,000,000	Rs. 654,000 + 22.5% of the amount exceeding Rs. 6,000,000
7.	Where taxable income exceeds Rs. 12,000,000	Rs. 2,004,000 + 32.5% of the amount exceeding Rs. 12,000,000.”

However, the government has taken a big U-turn and now proposed amendment to the Finance Bill, 2022 and decided to withdraw the exempt income threshold.

As per sources the government has proposed revision in salary tax rates for tax year 2023 effective from July 01, 2022. The following is the proposed rates for next tax year:

01. Where taxable income tax does not exceed Rs600,000: the tax rate should be zero.

02. Where taxable income exceeds Rs600,000 but does not exceed Rs1,200,000: the tax rate should be 2.5 per cent of the amount exceeding Rs1,200,000.

03. Where taxable income exceed Rs1,200,000 but does not exceed Rs2,400,000: the tax rate should be Rs15,000 + 12.5 per cent of the amount exceeding Rs1,200,000.

04. Where taxable income exceeds Rs2,400,000 but does not exceed Rs3,600,000: The tax rate should be Rs165,000 + 20% of the amount exceeding Rs2,400,000.

05. Where taxable income exceeds Rs3,600,000 but does not exceed Rs6,000,000: the tax rate should be Rs405,000 + 25 per cent of the amount exceeding Rs3,600,000.

06. Where taxable income exceeds Rs6,000,000 but does not exceed Rs12,000,000: the tax rate should be Rs1,005,000 + 32.5 per cent of the amount exceeding Rs6,000,000.

07. Where taxable income exceeds Rs12,000,000: the tax rate should eb Rs2,955,000 + 35 per cent of the amount exceeding Rs12,000,000.

The existing rate of income tax on the salary persons for tax year 2022 (July 01, 2021 – June 30, 2022) is as follow:

(2) Where the income of an individual chargeable under the head “salary” exceeds seventy-five per cent of his taxable income, the rates of tax to be applied shall be as set out in the following table, namely:—

1. Where taxable income does not exceed Rs. 600,000: 0%

2. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000: 5% of the amount exceeding Rs. 600,000

3. Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,800,000: Rs. 30,000 plus 10% of the amount exceeding Rs. 1,200,000

4. Where taxable income exceeds Rs. 1,800,000 but does not exceed Rs. 2,500,000: Rs. 90,000 plus 15% of the amount exceeding Rs. 1,800,000

5. Where taxable income exceeds Rs.2,500,000 but does not exceed Rs. 3,500,000: Rs. 195,000 plus 17.5% of the amount exceeding Rs. 2,500,000

6. Where taxable income exceeds Rs. 3,500,000 but does not exceed Rs. 5,000,000: Rs. 370,000 plus 20% of the amount exceeding Rs. 3,500,000

7. Where taxable income exceeds Rs. 5,000,000 but does not exceeds Rs. 8,000,000: Rs. 670,000 plus 22.5% of the amount exceeding Rs. 5,000,000

8. Where taxable income exceeds Rs. 8,000,000 but does not exceeds Rs. 12,000,000: Rs. 1,345,000 plus 25% of the amount exceeding Rs. 8,000,000

9. Where taxable income exceeds Rs. 12,000,000 but does not exceeds Rs. 30,000,000: Rs. 2,345,000 plus 27.5% of the amount exceeding Rs. 12,000,000

10. Where taxable income exceeds Rs. 30,000,000 but does not exceeds Rs. 50,000,000: Rs. 7,295,000 plus 30% of the amount exceeding Rs. 30,000,000

11. Where taxable income exceeds Rs. 50,000,000 but does not exceeds Rs. 75,000,000: Rs. 13,295,000 plus 32.5% of the amount exceeding Rs. 50,000,000

12. Where taxable income exceeds Rs. 75,000,000 Rs. 21,420,000 plus 35% of the amount exceeding Rs. 75,000,000.

June 25, 2022

HBL ordered to compensate bank fraud victim

ISLAMABAD: President of Pakistan, Dr. Arif Ali Alvi, on Wednesday ordered Habib Bank Limited (HBL) to immediate compensate a victim of bank fraud.

President Dr Arif Alvi reprimanded HBL for unnecessarily dragging the matter of reimbursement of a trivial amount of Rs. 39,000 to the victim of bank fraud.

READ MORE: SBP takes measures for prevention of digital bank fraud

He directed the bank to reimburse the defrauded amount, along with the payment of transportation charges, within fifteen days to the victim and termed the action of the HBL an act of malpractice and maladministration.

The President reprimanded the HBL for preferring representation before the President against the order passed by the Banking Ombudsman in favor of the victim of the bank fraud involving a meager amount.

READ MORE: SBP directs banks to report digital fraud cases

The President observed that the transfer of money from one account to another through cheating was a common incident of fraudulent activity but despite the knowledge of the account where the money landed and was then withdrawn no action was taken against the beneficiary of the transaction.

The President emphasized that the bank was liable to make good the loss of their customers and advised the bank management to look into the issue and take remedial measures to safeguard the interest of its customers, especially the small depositors and account holders.

READ MORE: Habib Bank, Meezan Bank directed to pay fraud victims

The President directed the State Bank of Pakistan, being a regulatory body, to take earnest action against both the Banks and bank branches by adopting regulatory and punitive action to redress the fraudulent activities which result from noncompliance with Rules and Regulations issued by the State Bank of Pakistan.

According to the details, an unknown person tricked Nazeer Ahmad Bhutta to provide the last digits of his ATM card and later deprived him of his deposit.

READ MORE: President Alvi rejects MCB Bank’s appeal in fraud case

The victim preferred an appeal before the Banking Ombudsman who decided the case in favour of the victim. However, HBL, instead of implementing the decision, preferred representation to the President.

The President upheld the decision of the Banking Ombudsman and directed the Bank to reimburse the defrauded money to the complainant.

June 22, 2022
Total bank accounts in Pakistan grow to 66.13 million

KARACHI: The number of bank accounts in Pakistan increased to 66.13 million by end of March 2022, showing a jump of 6.66 per cent when compared with 62 million bank accounts by end of same month last year, according to data released by the State Bank of Pakistan (SBP).

It is interesting to note that the statistics showed the population grew much faster than increase in bank accounts. The SBP showed estimated population of the country at 227 million by end of March 2022 as compared with 212 million in the same period of the last year, showing a growth of 7.07 per cent.

READ MORE: Internet banking posts 20% growth in 3Q: State Bank

During past one year the number of total banks in the country is same at 44. However, the number of bank branches grew to 16,788 by end of March 2022 as compared with 16,223 by end of same month last year.

The SBP presented following key highlights of Payment System Review for quarter ended March 30, 2022.

One EMI, M/s China Mobile Pakistan Electronic Commerce Company (CMPECC), was granted commercial license in Q3-FY22.

Number of POS machines reached to 96,975 while the number of payment cards declined slightly to 47.2 million from 48.7 million from the last quarter.

READ MORE: SBP renews status of credit rating agencies

E-banking volume and value grew by 2.6 per cent and 6.5 per cent respectively on Quarter-on-Quarter (QoQ) basis.

The number of internet banking users reached 7.6 million recording QoQ growth of 10.6 per cent. These users conducted 38.3 million transactions amounting to PKR 2,906.9 billion amounting to a quarterly growth of 13.5 per cent by volume and 19.9 per cent by value.

During the same quarter, 38.3 million POS transactions amounting to PKR 189.7 billion were conducted showing quarterly growth of 21.9 per cent by volume and 6.5 per cent by value.

A total of 9.1 million e-commerce transactions amounting to PKR 27.0 billion were conducted digitally showing quarterly growth in value by 1.3 per cent though volume decline by -32.7 per cent.

READ MORE: High tax may erode banks’ earnings up to 20%

Number of ATMs increased by 1.1 per cent as compared to previous quarter. Value of ATM transactions amounted to PKR 2,437.0 billion of which 90.5 per cent transactions were related to cash withdrawals and 5.1 per cent related to Inter Bank Funds Transfer (IBFT).

The number of mobile banking users declined by -1.0 per cent reaching to 12.0 million. Over 101.5 million transactions valuing around PKR 3,085.8 billion were conducted via mobile banking channels during the quarter, showing a growth of 8.1 per cent by volume and 5.4 per cent by value.

Branch network of Banks and MFBs has reached to 16,788 branches, which includes 16,643 Real-Time Online Branches (RTOB), 48 manual branches and 97 overseas branches.

Value of total RTGS (PRISM) transactions during the quarter amounted PKR 155.7 trillion of which PKR 106.2 trillion were related to Government Securities.

READ MORE: Pakistan slaps 45% corporate tax on banks

June 18, 2022
Prices of essential items surge by 28% in Pakistan

ISLAMABAD: The prices of essential items have recorded 28 per cent increase Year on Year (YoY) by week ended June 16, 2022, Pakistan Bureau of Statistics (PBS) said on Friday.

The surge in prices have been seen following the massive increase in prices of petroleum products by the government during last three rounds: first on May 27, 2022; second on June 02, 2022; and the last one on June 15, 2022.

READ MORE: Prices of essential items rise by 20% on first POL rate jump

However, the cumulative effect of inflation is expected to be seen in coming weeks.

The latest Sensitive Price Indicator (SPI) based inflation for the week ended June 16, 2022 has shown massive increase in prices of essential items over the same week last year.

Following are the rates that have witnessed increase during last one year:

READ MORE: Pakistan’s headline inflation up by 13.8% in May 2022

Onions (135.31 per cent), Diesel (132.61 per cent), Tomatoes (117.27 per cent), Petrol (110.16 per cent), Vegetable Ghee 1 Kg (81.76 per cent), Mustard Oil (80.88 per cent), Pulse Masoor (74.77 per cent), Cooking Oil 5 litre (71.52 per cent), Vegetable Ghee 2.5 Kg (68.47 per cent), LPG (60.97 per cent), Garlic (57.72 per cent), Washing Soap (52.73 per cent), Gents Sponge Chappal (52.21 per cent) and Chicken (51.11 per cent).

There are some other essential items that have witnessed decline in prices on YoY basis:

Chillies Powdered (43.42 per cent), Pulse Moong (18.06 per cent), Sugar (10.79 per cent), Electricity charges for Q1 (5.85 per cent) and Gur (3.35 per cent).

READ MORE: Pakistan’s inflation sharply up by 13.4% in April 2022

The comparison of prices of essential items on week on week basis, showed 3.38 per cent.

Increase observed in the prices of food items Chicken (12.10 per cent ), Potatoes (6.89 per cent), Cooked Daal (5.90 per cent), Pulse Gram (5.29 per cent) and Cooked Beef (5.19 per cent),non-food items Diesel (28.91 per cent), Gents Sponge Chappal (26.76 per cent), Gents Sandal (15.40 per cent), Petrol (11.43 per cent), Electricity Charges for Q1 (6.63 per cent) and Cigarettes (6.27 per cent), with joint impact of (2.53 per cent) into the overall SPI for combined group of (3.38 per cent).

On the other hand, decrease observed in the prices of Onions (5.20 per cent), Wheat Flour (2.19 per cent), LPG (1.32 per cent), Bananas (0.83 per cent), Gur (0.45 per cent) and Sugar (0.02 per cent).

READ MORE: Pakistan’s headline inflation increases by 12.7% in March

June 18, 2022
New petroleum prices in Pakistan from June 16, 2022

ISLAMABAD: Pakistan on Wednesday announced yet another hike in petroleum prices effective from June 16, 2022.

Finance Minister Miftah Ismail at a press conference announced the increase in prices of petroleum products.

It is third consecutive increase in petroleum products. The government massively increased the prices of petroleum products.

READ MORE: New petroleum prices in Pakistan from June 03, 2022

The finance minister announced an increase of Rs24 per liter in price of petrol.

The price of petrol increased by Rs84 to Rs233.89 from Rs149.89 as of May 26, 2022.

Similarly, the government announced to increase the price of diesel to Rs263.31 per liter effective from June 16, 2022. The rate of high speed diesel has been increased by Rs59 per liter. The rate of this product was Rs144.16 as of May 26, 2022. A cumulative increase of Rs119 during past 20 days.

New prices of petroleum products with effect from June 16, 2022 will be as follows;

i. MS ( Petrol) Rs. 233.89/Liter

ii. High Speed Diesel(HSD) Rs. 263.31/Liter

iii. Kerosene (SKO) Rs. 211.43/Liter

iv. Light Diesel Oil (LDO) Rs. 207.47/Liter.

READ MORE: Petroleum prices in Pakistan from June 01, 2022

Previously, the petrol prices have been increased up to Rs60 per liter during May 27 to June 02.

The Finance Minister Miftah Ismail announced the increase in prices of petroleum products twice to persuade the International Monetary Fund (IMF) to release the next tranche of around $1 billion.

The PTI government during its tenure maintained the petrol prices by granting huge subsidized rates to facilitate the citizens. As though the new government still kept the same subsidy on petrol till May 26, 2021.

READ MORE: Petroleum levy to generate Rs750 billion

However, on account of pressure by IMF and the high price of oil in the international market has left no option for the government to minimize the prices.

According to the sources, the government may further increase the petroleum prices tonight to meet the IMF demand.

It may be mention here that the government has very few choices in not revising the prices of petroleum products because of high international oil prices and sharp decline in rupee value.

READ MORE: Share of domestic electricity consumption declines

June 15, 2022
Punjab announces 15% increase in salary

LAHORE: Punjab government has announced an increase of 15 per cent for employees of provincial government.

The Punjab government on Wednesday announced its budget for fiscal year 2022/2023. The finance minister announced an increase of 15 per cent for employees of provincial government. Besides, the provincial government also increased 5 per cent for pension.

The finance minister said that provincial government was well aware of high inflation and difficulties of masses.

About the employees of provincial government, the finance minister said the employees were committed to their jobs.

The minister also announced a special allowance of 15 per cent to the salary of employees of grade 1 to grade 19.

Further, the government also increased the minimum wage from Rs20,000 to Rs25,000 per month.

June 15, 2022
What are new petroleum prices in Pakistan?

KARACHI: The government is likely to revise the prices of petroleum products today June 15, 2022 for next fortnight. Recently, the petrol prices have been increased up to Rs60 per liter during May 27 to June 02.

READ MORE: New petroleum prices in Pakistan from June 03, 2022

The Finance Minister Miftah Ismail announced the increase in prices of petroleum products twice to persuade the International Monetary Fund (IMF) to release the next tranche of around $1 billion.

After the increase, the prices effective from June 03, 2022 to till date are:

READ MORE: Petroleum prices in Pakistan from June 01, 2022

Petrol at Rs209.86 per; High Speed Diesel at Rs204.15 per liter; kerosene oil at Rs181.94 per liter; and light diesel oil at Rs178.31 per liter.

The PTI government during its tenure maintained the petrol prices by granting huge subsidized rates to facilitate the citizens. As though the new government still kept the same subsidy on petrol till May 26, 2021.

READ MORE: Petroleum levy to generate Rs750 billion

However, on account of pressure by IMF and the high price of oil in the international market has left no option for the government to minimize the prices.

According to the sources, the government may further increase the petroleum prices tonight to meet the IMF demand.

READ MORE: Share of domestic electricity consumption declines

It may be mention here that the government has very few choices in not revising the prices of petroleum products because of high international oil prices and sharp decline in rupee value.

June 15, 2022
Sindh increases salary by 15% from July 1, 2022

KARACHI: The Sindh government on Tuesday announced a 15 per cent raise in salary of provincial government employees and 5 per cent increase in pension effective from July 01, 2022.

Sindh Chief Minister Syed Murad Ali Shah announced raise in pay and pension while presenting the provincial budget 2022-2023.

READ MORE: Sindh unveils Rs1.714 trillion budget for 2022/2023

The chief minister announced various relief measures for employees and pensioners during next fiscal year.

He said Adhoc Relief Allowances 2016, 2017, 2018, 2019 and 2021 at the rates admissible to employees of Federal Government are being merged and Revised Basic Pay Scale 2022 for Civil Servants of Government of Sindh is being introduced on the pattern of Federal Government.

Adhoc Relief Allowance at the rate of 15 per cent of Basic Pay Scales to Civil Servants of Government of Sindh w.e.f. 1st July 2022 is proposed.

READ MORE: Khyber Pakhtunkhwa raises salary, pension by 15%

Disparity Allowance at the rate of 33 per cent of Basic Pay will be paid to Civil Servants in BPS-1 to 16 and at the rate of 30 per cent to Civil Servants in BPS-17 and above in lieu of the differential rate of Ad-hoc Relief Allowances 2013, 2015, 2016, 2017, 2018, 2019, 2020 & 2021, which are being abolished w.e.f 1st July, 2022.

Pensioners of Government of Sindh were already getting 22.5 per cent more increase in net pension than pensioners of Federal Government till February 2022. Therefore, an increase at the rate of 5 per cent of net pension will be paid to the pensioners of the Sindh Government w.e.f 1st July, 2022.

READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

Thus, after announcement of 10 per cent increase in net pension by Federal Government in March 2022 and enhancement of the rate of increase to 15 per cent from 1st July 2022, the pensioners of Government of Sindh will still be getting 12.5 per cent more of net pension than the pensioners of Federal Government.

READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers

June 14, 2022
Pakistan imposes tax on high net-worth individuals

ISLAMABAD: Pakistan has imposed an additional rate of tax on high net-worth individuals for poverty alleviation.

The country on June 10, 2022 presented its federal budget for the fiscal year 2022/2023. The budget was presented amid severe financial crisis.

READ MORE: Finance Bill defines beneficial owner under tax laws

Finance Minister Miftah Ismail urged the high income earner to contribute toward poverty reduction by paying additional amount of tax.

A separate section has been introduced to the Income Tax Ordinance, 2001 to levy additional tax on persons earning more than Rs300 million in a year.

READ MORE: Pakistan reduces salary tax slabs to 7 in budget 2022/23

Finance Bill, 2022 has proposed insertion of a new Section 4C to Income Tax Ordinance, 2001 for the purpose:

“4C. Tax on high earning persons for poverty alleviation.― (1) A tax shall be imposed for poverty alleviation for tax year 2022 and onwards at the rates specified in Division IIB of Part I of the First Schedule, on income of every person.

(2) For the purposes of this section, “income” shall be the sum of the following:—

READ MORE: Massive cut in subsidies to curtail current expenditures

(i) profit on debt, dividend, capital gains, brokerage and commission;

(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section 9 of the Ordinance, if not included in clause (i);

(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business losses under Fourth, Fifth and Seventh Schedules.

READ MORE: Petroleum levy to generate Rs750 billion

(3) The tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

(4) Where the tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the tax payable, and shall serve upon the person, a notice of demand specifying the tax payable and within the time specified under section 137 of the Ordinance.

(5) Where the tax is not paid by a person liable to pay it, the Commissioner shall recover the tax payable under sub-section (1) and the provisions of Part IV, X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of tax as these apply to the collection of tax under the Ordinance.

READ MORE: FBR assigned tax collection target of Rs7 trillion in 2022/2023

(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

Tax on high earning persons for poverty alleviation

The rate of tax under section 4C shall be:-

Income under section 4C Rate of tax
Where income does not exceed Rs. 300 million 0% of the income
Where income exceeds Rs. 300 million 2% of the income

June 11, 2022
Massive cut in subsidies to curtail current expenditures

ISLAMABAD: Pakistan has announced massive cut in subsidies and allocated an amount of Rs699 billion for the fiscal year 2022/2023 as compared with the amount of Rs1.515 trillion in the outgoing fiscal year.

The drastic cut in subsidies has been aimed at curtailing current expenditures to reduce the fiscal deficit.

READ MORE: Petroleum levy to generate Rs750 billion

Pakistan on June 10, 2022 presented its federal budget 2022/2023 which estimated current expenditure at Rs8.69 trillion during the next fiscal year as compared with estimated Rs8.516 trillion in the outgoing fiscal year.

An amount of Rs3.95 trillion has been allocated for mark-up payments for the fiscal year 2022/2023 as against Rs3.14 trillion in the outgoing fiscal year.

READ MORE: FBR assigned tax collection target of Rs7 trillion in 2022/2023

A whopping Rs3.44 trillion has been earmarked for mark-up payment on domestic debt during the next fiscal year as compared with Rs2.77 trillion in the current fiscal year. Meanwhile, an amount of Rs511 billion has been allocated for mark-up payment on foreign debt during next fiscal year.

The government estimated an amount of Rs530 billion for payment of pension during the next fiscal year. This amount includes Rs395 billion for the pension of military persons and Rs135 billion for the pension of civil employees.

READ MORE: Budget 2022/2023: Salient features of customs duty act

The government allocated an amount of Rs1.52 trillion for defence affairs and services during fiscal year 2022/2023 as compared with the estimated amount of Rs1.48 trillion in the outgoing fiscal year. The actual allocation was Rs1.37 trillion for the fiscal year 2021/2022.

An amount of Rs100 billion has been allocated for pay and pension during the next fiscal year.

READ MORE: Budget 2022/2023: Salient features of sales tax

The government earmarked an amount of Rs550 billion for running of civil government during fiscal year 2022/2023 as compared with Rs530 billion in the current fiscal year. The actual allocation for running of civil government was Rs479 billion in fiscal year 2021/2022.

June 11, 2022

Income under section 4C	Rate of tax
Where income does not exceed Rs. 300 million	0% of the income
Where income exceeds Rs. 300 million	2% of the income