The Federal Board of Revenue (FBR) has unveiled the revised salary tax card for the tax year 2022-2023, incorporating the latest withholding income tax rates.
The updated tax rates, effective from July 1, 2022, have been incorporated into the Income Tax Ordinance, 2001, following amendments through the Finance Act, 2022.
These withholding tax rates are applicable to salaried individuals and are imposed under Section 149 of the Income Tax Ordinance, 2001. Employers are required to deduct tax from the salary payments made to employees based on the prescribed rates.
A notable aspect of the updated tax card is that the deduction rates for withholding tax on salaried persons remain uniform, irrespective of whether individuals are listed on the Active Taxpayers List (ATL) or not.
The following is the tax card for salaried persons for the tax year 2022-2023:
1. Taxable Income: Up to Rs600,000
• Rate of Tax: 0%
2. Taxable Income: Rs600,001 – Rs1,200,000
• Rate of Tax: 2.5% of the amount exceeding Rs600,000
3. Taxable Income: Rs1,200,001 – Rs2,400,000
• Rate of Tax: Rs15,000 + 12.5% of the amount exceeding Rs1,200,000
4. Taxable Income: Rs2,400,001 – Rs3,600,000
• Rate of Tax: Rs165,000 + 20% of the amount exceeding Rs2,400,000
5. Taxable Income: Rs3,600,001 – Rs6,000,000
• Rate of Tax: Rs405,000 + 25% of the amount exceeding Rs3,600,000
6. Taxable Income: Rs6,000,001 – Rs12,000,000
• Rate of Tax: Rs1,005,000 + 32.5% of the amount exceeding Rs6,000,000
7. Taxable Income: Amount exceeding Rs12,000,000
• Rate of Tax: Rs2,955,000 + 35% of the amount exceeding Rs12,000,000
It is important to note that the rates mentioned in the table apply when the income of an individual chargeable under the head ‘salary’ exceeds seventy-five percent of their taxable income.
The uniformity in withholding tax rates for salaried individuals, regardless of their ATL status, aims to simplify the tax deduction process and foster compliance among taxpayers. Employers and employees are urged to familiarize themselves with these updated rates to ensure accurate and timely tax deductions.
As the FBR continues to implement measures to streamline the taxation system, individuals are advised to stay informed about any further updates or changes in tax regulations to meet their obligations effectively. The FBR’s commitment to transparency and efficiency underscores its ongoing efforts to enhance the tax landscape in Pakistan.
