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Print Print 2022-06-05

Budget 2022-23: Rs450bn new taxation steps shared with PM

  • Tax increase expected for salaried persons within the range of Rs0.1 million to Rs0.2 million per month
Published June 5, 2022

ISLAMABAD: The Federal Board of Revenue (FBR) shared the details of the new taxation measures of Rs400-450 billion, including the proposed plan on the Personal Income Tax Reforms to be incorporated in the Finance Bill 2022, with the Prime Minister Shehbaz Sharif on Saturday.

Sources told Business Recorder Saturday that Finance Minister Miftah Ismail, FBR Chairman Asim Ahmed, and his team of budget makers including FBR Member Inland Revenue Policy met Prime Minister Shehbaz Sharif at Lahore. On Saturday, tax authorities went to Lahore to brief Prime Minister Shehbaz Sharif to finalize the new budget proposals with new taxation measures to the tune of Rs400-450 billion for the next fiscal year. The initial sketch of budget proposals was discussed in detail during the meeting held with the Prime Minister at Lahore.

- These are proposed measures

  • Number of slabs of the salaried class has been proposed to be reduced to six

  • That there would be no change in the tax rates of the salaried class drawing salary up to Rs0.1 million

  • A slight increase is expected for the salaried earners within the range of Rs0.1 million to Rs0.2 million per month

  • More raise in income tax rate is expected for the salaried individuals earning a salary above Rs0.2 million per month

  • Time-bound levy or additional income tax is proposed to be levied on the annual income/profits earned by the steel sector, pharmaceutical industry and other profit earning sectors and also raise the minimum tax from two to six percent on the import of edible oil in the budget (2022-23)

  • Govt is considering increasing the rate of minimum tax from two to six percent on the import of edible oil in the next fiscal budget

  • Finance Bill 2022 is expected to introduce a new concept of tax, i.e., “Windfall Levy” in the Income Tax Ordinance, 2001 for special taxation of the potential sectors making extraordinary profits, but not depositing the due amount of taxes

Tax authorities discussed in detail the strategy including enforcement and administrative measures to meet the Rs7.2 trillion revenue collection target for 2022-23. However, the Prime Minister has directed the FBR to meet the commitment of the present government to provide a conducive and friendly environment to the businessmen, ease of doing business, employment generation, export promotion, and economic growth of the country.

Sharing the proposed plan on the Personal Income Tax Reforms, the FBR reportedly informed the Prime Minister that the number of slabs of the salaried class has been proposed to be reduced to six. It has been proposed that there would be no change in the tax rates of the salaried class drawing salary up to Rs0.1 million. A slight increase is expected for the salaried earners within the range of Rs0.1 million to Rs0.2 million per month and more raise in income tax rate is expected for the salaried individuals earning a salary above Rs0.2 million per month.

Growth unlikely to exceed 3pc mark in FY23: economist

According to sources, the taxation proposals for these profit-earning sectors would help the budget markers to avert possible heavy taxation on different slabs of the salaried class. There are 1.9 million salaried taxpayers and the demand is to generate an additional Rs80 billion from the salaried class, earning Rs1 million to Rs6 million per annum.

Around 70 percent of the salaried taxpayers fall within the slabs of Rs1 million to Rs6 million per year. The FBR will go to any extent to avoid this measure of heavy taxation on the salaried class except for those earning very high salaries. A major chunk of higher tax to be generated from the salaried class is expected to be covered by taxation of high revenue earning sectors in the coming budget.

Tax authorities informed the Prime Minister that a time-bound levy or additional income tax is proposed to be levied on the annual income/profits earned by the steel sector, pharmaceutical industry and other profit earning sectors and also raise the minimum tax from two to six percent on the import of edible oil in the budget (2022-23).

The government is considering increasing the rate of minimum tax from two to six percent on the import of edible oil in the next fiscal budget to increase the incidence of tax on this high profit earning sector. The new levy is expected to be imposed on the sectors and industries earning huge profits and it would be imposed for a limited period.

The Finance Bill 2022 is expected to introduce a new concept of tax, i.e., “Windfall Levy” in the Income Tax Ordinance, 2001 for special taxation of the potential sectors making extraordinary profits, but not depositing the due amount of taxes. The FBR will collect the “Windfall Levy” from sectors earning extraordinary profits during the last few years. The “Windfall Levy” would be a separate tax and would be collected along with the income tax deposited every year. The “Windfall Levy” would be collected on an annual basis at the time of payment of tax by potential sectors on the filing of income tax returns, the sources added.

Copyright Business Recorder, 2022

Comments

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Khan Jun 05, 2022 09:23am
Instead of broadening the tax base unfortunately FBR is planning to further burden the salaried class which is already entangled in double Taxation system. They pay direct tax (income tax on source) and indirect tax(GST) again from taxes income of all commodities. Why cant they broaden their tax base through identification of non Filers from Big Property, Cars, businesses owners, Even they just identify tax evaders in posh localities of Islamabad, Lahore, Karachi can generate this much additional tax required without burdening salaried class
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SYED FARZAN AHMED Jun 05, 2022 12:07pm
Yes please! Increase taxes on those who are barely getting by with salaries less than 200,000 PKR per month, while creating a "business friendly" environment for the business folk. What is this? trickle-down economics? We know that is a debunked falsity right? the businessmen, when given the opportunity to so save on taxes, don't put that excess money towards their businesses for growth; they keep them in fat bank accounts to accrue interest! A shame...
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Rizwan Jun 05, 2022 02:09pm
salaried class ki he class looooooo
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Shahzad Jun 05, 2022 03:01pm
Burdening the existing tax payers without curtailing current and defense expenditure is futile excercise. Gov should take steps to ensure money collected is spent on development.
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Saadi Jun 05, 2022 04:27pm
How would middle class earners be able to survive as people are already paying for home installments in huge amounts along with Car installments from their monthly salaries. Families of such households barely manage their expenses on monthly basis. If the slabs are reduced how can someone be able to account for the extra burdening of additional 60-70k per month tax. How will we be able to survive? The government is trying to crush the middle class absolutely and increase the lower class. No one in the lawyers, doctors, business men are in the tax net. Doctors charging 3-4k in visit fee are not even recorded and even receipts are not given. A simple doctor who does own practice takes home 30-40k minimum in cash everyday without no account towards tax. Pls do not kill the middle class. We barely get 10-12 k raise after one year, how can we pay such huge tax amount every month
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Ahad Jun 05, 2022 10:37pm
The exemption limit for the salaried class should be Rs.1.2 million annually, the same was implemented by PMLN in the year 2018, but later on PTI Govt through so-called tabedeli bring down the exemption limit up Rs.600k. Please reduce the luxuries of Army officers, Judges, Bureaucrats and ministers instead of targeting the salaried class
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Osama Jun 06, 2022 07:07pm
It is good to sleep whole year instead of making efforts to expand the tax base and when time comes for providing new budget, just increase the tax rates on salaries to the extent that meet the requirements. This is happen when there is no performance checks and provide jobs to individuals who have 0 % knowledge in tax. A salaried persons worked whole year and hardly gets increment of 5 to 10 percent of its salary. If the tax rates significantly increase, it means you have pushed back the salary person 4 to 5 years.
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Osama Jun 06, 2022 07:07pm
It is good to sleep whole year instead of making efforts to expand the tax base and when time comes for providing new budget, just increase the tax rates on salaries to the extent that meet the requirements. This is happen when there is no performance checks and provide jobs to individuals who have 0 % knowledge in tax. A salaried persons worked whole year and hardly gets increment of 5 to 10 percent of its salary. If the tax rates significantly increase, it means you have pushed back the salary person 4 to 5 years.
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ALI AHMAD Jun 07, 2022 08:23am
It is so tuff to paid tax on each and everything, Please do not kill the middle class people, We barely get 10-12 k raise after one year, how can we pay such huge tax amount every month
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Mustafa Jun 09, 2022 02:07am
You should fire the people who cannot broade the tax base rather than increasing burden of taxes on people already filing their taxes. Beyond pathetic approach.
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Daniyal Jun 10, 2022 12:42pm
They will tax poor more and snatch food too
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