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Tag: salary income

  • Tax collection from salary income declines by 44 percent: State Bank

    Tax collection from salary income declines by 44 percent: State Bank

    KARACHI: Tax collection from salary income declined by 44 percent due to changes in income tax rates for all income slabs, according to a report issued by State Bank of Pakistan (SBP).

    The SBP said that during first nine-months of fiscal year 2018/2019 the tax collection on salaries remained much lower than in the same months of preceding year.

    The Federal Board of Revenue (FBR) collected Rs53.5 billion as tax from salary income during July – March of Fiscal year 2018/2019 as compared with collection of Rs95.2 billion in the same period of the preceding fiscal year.

    “Tax collection on salaries also remained much lower than last year. In absolute terms, tax on salaries declined by Rs 41.7 billion during the review period, mainly due to changes in income tax rates for all income slabs,” the SBP said.

    Direct taxes having a share of 37 percent in overall FBR tax collection recorded a decline of 0.8 percent during Jul-Mar FY19 in contrast to a rise of 12.2 percent during the same period last year.

    Measures like the suspension of tax on mobile top-ups; reduction in come tax rates on salaries; reduction in the withholding tax rate on dividends; and spending under the PSDP explain the decline in direct taxes.

    Within direct taxes, major hit emerged from withholding taxes (largest contributor in direct taxes), which recorded a contraction of 8.7 percent during Jul-Mar FY19 against a rise of 16.1 percent during the same period last year.

    One-half of the decline in total withholding taxes is in the category of telephone/mobiles. Collection from telephone was only Rs 5.3 billion during Jul-Mar FY19 compared to a collection of Rs 38.0 billion during the same period last year.

    This lower collection from telephone/mobile phones was not surprising amid suspension of taxes on mobile phone top-up by the Supreme Court.

    Receipts from contracts were also lower compared to last year largely owing to a cut in the PSDP. Voluntary payments increased by Rs 34.3 billion during Jul-Mar FY19.

  • Finance Act 2019: Tax slabs for salary income

    Finance Act 2019: Tax slabs for salary income

    ISLAMABAD: The Parliament has approved the Finance Bill 2019 to implement rate of income tax on salary income.

    The statutory exempt income has been enhanced to Rs600,000 for tax year 2020 through Finance Act, 2019.

    S.No Taxable Income Rate of Tax
    (1) (2) (3)
    1.Where taxable income does not exceed Rs. 600,0000%
    2.Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,0005% of the amount exceeding Rs. 600,000
    3.Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,800,000Rs. 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. 2,500,000Rs. 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. 3,500,000Rs. 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. 5,000,000Rs. 370,000 plus 20% of the amount exceeding Rs. 3,500,000
    7.Where taxable income exceeds Rs. 5,000,000 but does not exceed Rs. 8,000,000Rs. 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 exceed Rs. 12,000,000Rs. 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 exceed Rs.30,000,000Rs. 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 exceed Rs.50,000,000Rs. 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 exceed Rs.75,000,000Rs. 13,295,000 plus 32.5% of the amount exceeding Rs. 50,000,000
    12.Where taxable income exceeds Rs.75,000,000Rs. 21,420,000 plus 35% of the amount exceeding Rs. 75,000,000″;

    The tax slabs should be applicable on a person’s where the income of an individual chargeable under the head “salary” exceeds seventy-five per cent of his taxable income.