Budget 2022-23: here are revised tax rates and slabs for the salaried income group
- Govt targets 'ultra' rich with new taxation slabs
Budget for fiscal year 2022-23 came as a mixed bag for the salaried income group, as the government reduced tax rates and number of slabs, but removed the available provision of credit through omission of deductible allowance for profit on debt and tax credit for investment in shares, health insurance and pension funds.
Here are the new and old income tax rates for the salaried income group
"Omission of deductible allowance for profit on debt and tax credit for investment in shares, health insurance and pension funds," stated the Federal Board of Revenue (FBR) in its 'Salient Features' document as a Revenue Measure.
Scrutinising the Finance Bill, Business Recorder found that tax slabs for salaried class had been reduced from 12 to seven.
Access the complete Finance Bill 2022-23 here
As per the budget proposals, income tax is not to be imposed on individuals (where income of the individual from salary exceeds 75% of taxable income) earning between 0 and Rs600,000 a year. On the next slab (those earning between Rs600,000 and Rs1.2 million a year), a nominal amount of Rs100 will be deducted per year.
Coming to the third slab – individuals earning more than Rs1.2 million but not exceeding Rs2.4 million a year – will be charged 7% of the amount exceeding Rs1,200,000.
To understand this, imagine a person with an income of Rs1,400,000 per year. They will be charged 7% of Rs200,000 (Rs1,400,000 minus Rs1,200,000 since that is the amount exceeding Rs1,200,000).
Ahead of budget 2022-23, here is a review of income tax rates during the outgoing fiscal year
In the last slab, however, for an individual earning more than Rs12 million a year (monthly income of Rs1 million), the person will be charged Rs2,004,000.
Under the current rate, the person would have been paying Rs2,345,000.
But the real change kicks in when a person earns around Rs20 million a year.
Under the current rate, a person with a yearly income of Rs20 million (monthly income of nearly Rs1.67 million), for example, would be paying nearly Rs4,545,000 in taxes during the 12 months.
Now, with the change, the person would have to pay nearly Rs4,605,000.