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fbrREOCRDER REPORT

ISLAMABAD: The Federal Board of Revenue will soon clarify income tax payment by salaried persons through an income tax circular to guide the employers how to deduct tax from their employees.

Sources told Business Recorder here on Monday that the queries of the general public would be duly addressed in the income tax circular for accurate deduction of tax by the employers. Similarly, any query by chambers, etc, would also be clarified pertaining to tax payments by the salaried persons. At present, employers have been engaged in working out tax of their employees as per new slabs under the Finance Act 2012. The FBR clarification would facilitate the business community as well as general masses in accurate calculation of tax from the salaried class.

The FBR has increased the number of tax slabs from five to six for the salaried class through Finance Act 2012, on the conscious policy decision of the government to provide minimum tax relief to persons falling into the highest brackets of taxable income of Rs 2,500,000 and above.

Sources said the tax relief has been provided to all salaried persons falling in six slabs under the new Finance Act. The maximum tax relief has been provided to the first three slabs. However, less tax relief has been given to persons covered under the highest tax slabs. The persons earning taxable income of Rs 2,500,000 and above have been subjected to the flat tax rate of 20 percent. The salaried persons covered under the highest tax slabs are already earning huge income and they have been given minimum relief under the revised tax slabs for the salaried class. The persons earning taxable income of Rs 2,500,000 and above have only be given tax benefit of basic exemption limit of Rs400,000. The remaining income has been made taxable by slapping flat rate of 20 percent on the persons earning taxable income of Rs 2,500,000 and above.

The progressive way of taxation has been adopted in the first three slabs ie where taxable income is Rs zero to Rs 400,000, the rate of the tax would be zero percent. Where taxable income is Rs 400,000 to Rs 750,000, the rate of tax would be 5 percent of the amount exceeding Rs 400,000 and where taxable income is Rs 750,000 to Rs 1,500,000, the rate of tax would be Rs 17,500+10 percent of the amount exceeding Rs 750,000. Thus, maximum tax relief has been given in the first three slabs.

Under the new tax slabs structure for the salaried class, where taxable income is Rs zero to Rs 400,000, the rate of the tax would be zero percent. Where taxable income is Rs 400,000 to Rs 750,000, the rate of tax would be 5 percent of the amount exceeding Rs 400,000; where taxable income is Rs 750,000 to Rs 1,500,000, the rate of tax would be Rs 17,500+10 percent of the amount exceeding Rs 750,000; where taxable income is Rs 1,500,000 to 2,000,000, the rate of tax would be Rs 95,000+15 percent of the amount exceeding Rs 1,500,000; where taxable income is Rs 2,000,000 to Rs 2,500,000, the rate of tax would be Rs 175,000+17.5 percent of the amount exceeding Rs 2,000,000 and where taxable income is Rs 2,500,000 and above the rate of tax would be Rs 420,000+20percent of the amount exceeding Rs 2,5000,000.


 



 
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