With budget for FY 2019-2020, Government has revised the income tax slabs for salaried class as well. The relief given by the previous government has been withdrawn. As the Government believes that it had to bear losses of about Rs. 80 billion due to the exemptions to salaried individuals in last budget.
The revised income tax slabs 2019-2020 impose heavy taxes on salaried class. There are 12 slabs in total. Minimum taxable salary income limit is now Rs. 600,000. It is brought down from Rs. 1,200,000 from last year.
Income Tax Slabs for Salaried Class 2019-2020
Per the budget for FT 2019-20, here are the revised slabs:
|Annual Income||Rate of Tax|
|Less than 600,000||0% – No tax|
|Rs. 6 lacs to Rs. 12 lacs||5% of the amount exceeding 6 lacs|
|Rs. 12 lacs to Rs. 18 lacs||Rs. 30,000 +|
10% of the amount exceeding 12 lacs
|Rs. 18 lacs to Rs. 25 lacs||Rs. 90,000 +|
15% of the amount exceeding 18 lacs
|Rs. 25 lacs to Rs. 35 lacs||Rs. 195,000 +|
17.5% of the amount exceeding 25 lacs
|Rs. 35 lacs to Rs. 50 lacs||Rs. 370,000 + |
20% of the amount exceeding 35 lacs
|Rs. 50 lacs to 80 lacs||Rs. 670,000 + |
22.5% of the amount exceeding 50 lacs
|Rs. 80 lacs to Rs. 1.20 crore||Rs. 1,345,000 + |
25% of the amount exceeding 80 lacs
|Rs. 1.20 crore to Rs. 3 crore||Rs. 2,345,000 + |
27.5% of the amount exceeding 1.20 crore
|Rs. 3 crore to Rs. 5 crore||Rs. 7,295,000 + |
30% of the amount exceeding 3 crore
|Rs. 5 crore to Rs. 7.5 crore||Rs. 13,295,000 + |
32.5% of the amount exceeding 5 crore
|Above Rs. 7.5 crore||Rs. 21,420,000 + |
35% of the amount exceeding 7.5 crore
These revised tax rates will take effect from July 2019.
What is the minimum taxable salary in Pakistan?
Rs. 50,000 per month. Or Rs. 600,000 per anum.
Per the revised income tax rates, anyone who earns a salary of Rs. 50,000 or above per month will have to pay taxes. Those who have a monthly salary of Rs. 1 lacs or above will have to pay Rs. 30,000 fixed tax plus 10% of the amount exceeding 18 lacs. The rate of tax gets higher for high-salary individuals, as you can see in the table above.
How much income tax deduction you will have per month?
According to new income tax slabs in Budget 2019-2020, the monthly income tax deduction from salary will be as under:
|Monthly Income||Monthly Tax Deduction|
|Rs. 50,000||No tax.|
|Rs. 50,000 to Rs. 1 lac||5% of amount above Rs. 50,000|
|Rs. 1 lac to 1.5 lac||Rs. 2,500 + 10% of amount above Rs. 1 lac|
|Rs. 1.5 lac to Rs. 208,333||Rs. 7,500 + 15% of amount above Rs. 1.5 lac|
|Rs. 208,333 to Rs. 291,666||Rs. 16,250 + 17.5% of amount above Rs. 208,333|
|Rs. 291,666 to Rs. 416,666||Rs. 30,833 + 20% of amount above Rs. 291,666|
|Rs. 416,666 to Rs. 666,667||Rs. 55,833 + 22.5% of amount above Rs. 416,666|
|Rs. 666,667 to Rs. 10 lacs||Rs. 112,083 + 25% of amount above Rs. 666,667|
|Rs. 10 lacs to 25 lacs||Rs. 195,416 + 27.5% of amount above Rs. 10 lac|
|Rs. 25 lacs to Rs. 4,166,666||Rs. 607,916 + 30% of amount above Rs. 25 lac|
|Rs. 4,166,666 lacs to Rs. 62.5 lacs||Rs. 1,107,917 + 32.5% of amount above Rs. 4,166,666|
|Above Rs. 62.5 lacs||Rs. 1,785,000 + 35% of amount above Rs. 62.5 lacs|
Government has also announced a 10% increases in basic salary of all Govt. employees from grade 1 to 17. However, these revised tax rates could mean that the salaried class could be earning less than previous year. Then there is the increased inflation rate, increased exchange rate of USD, and a hike in prices of sugar, oil and other basic necessities.
Increasing tax rates on salaried class is easiest way to generate more tax revenue for the Government. However, a better policy would be to widen the tax net, instead of crippling those who pay taxes.