Daily Times

Given Pakistan’s precarious economic state and the government’s desire to increase its tax collection, the announcement of the budget for 2022-23 is scheduled to take place tomorrow (Friday), and market talk implies an increase in income tax rates for the salaried group given the upcoming budget.

The previous budget announcement for 2021-22, which the government stated was intended to be growth-friendly, included the decision by the government to keep the income tax rates for the salaried group at their current levels. At the moment, individuals who earn between zero and 600,000 rupees annually are exempt from paying income tax (provided that the individual’s income from salary is more than 75pc of the individual’s taxable income). Those who fall into the next tax bracket, which has a maximum yearly income of Rs1.2m and pays an additional 5pc tax on any earnings above Rs600,000.

Consider the case of a person whose annual salary is 80,000 rupees to better grasp this concept. They will be assessed a fee equal to 5pc of the Rs200,000 (Rs800,000 minus Rs600,000 since that is the amount excess). If annual profits are Rs1.8m, a one-time payment of Rs30,000 and an additional 10pc of any income that is greater than Rs1.2m would be due (in this case, Rs600,000). In this particular scenario, the annual tax that must be paid is Rs30,000 plus Rs60,000, which totals Rs90,000. According to reports, the Personal Income Tax Reforms will be included in the Finance Bill 2022 when it is finally passed.

Officials from the Federal Board of Revenue met with Prime Minister Shehbaz Sharif on Saturday to finalize the new budget plans for the upcoming fiscal year, which include additional taxation measures with a total value of between 400 and 450 billion rupees. During the discussion with the Prime Minister, a first draught of the proposed changes to the budget was dissected in great depth. It has been suggested that the number of salary brackets for the salaried class be trimmed down to six.

In addition, there would be no change to the tax rates that apply to those in the salaried class who make up to Rs0.1m in annual salary. It is anticipated that those who earn salaries in the range of Rs0.1m to Rs0.2m per month will see a modest boost in their income. It is anticipated that the income tax rate will be raised further for those salaried individuals whose monthly pay is greater than Rs0.2m. At this point, all attention is focused on the Minister of Finance, Miftah Ismail, who is scheduled to make the budget statement before the National Assembly tomorrow.