In order to fulfill the demands of the International Monetary Fund (IMF), the government has passed the burden to the salaried class by increasing their tax rates. As per proposed amendments to the Finance Bill 2022, the minimum income tax rate of 2.5% has been set for those earning up to Rs100,000 a month and a maximum of 35% tax rate is set for those earning a monthly income of over Rs1 million.
Salaried class to take the blow
Back in June, the Finance Minister, Miftah Ismail, announced an income tax relief of Rs47 billion for the salaried class, now, not only the relief is withdrawn but the government has also imposed an additional Rs33 billion in taxes in comparison with June 2021 for the salaried class. According to the experts, the new tax slabs would be a nightmare for the salaried class.
The government has imposed a 10% ‘super tax’ on 13 high-earning sectors of the economy, with aim of generating Rs. 80 billion in additional revenue. The 13 sectors being targeted for the 10% tax hike are; cement, sugar, steel, oil and gas, LNG terminals, textiles, banking, automobile industry, tobacco, fertilizer, aviation, chemicals and beverages.
Revised tax slabs
The revised tax slabs for high-salaried individuals are as follows:
- People earning Rs600,000 to Rs1.2 million per year will pay a tax of 2.5 percent
- People earning Rs1.2 million to Rs2.4 million will pay a 12.5 percent tax
- People earning Rs2.4 million to Rs3.6 million a year will be charged at Rs165,000 plus 20 percent of the amount exceeding Rs2.4 million
- People earning Rs3.6 million to Rs6 million a year will be charged at Rs405,000 plus 25 percent of the amount exceeding Rs3.6 million
- People with an annual income of Rs6 million to Rs12 million will be charged at Rs1.005 million plus 32.5 percent of the amount exceeding Rs6 million
- People earning more than Rs12 million a year will be charged at Rs2.955 million plus 35 percent of the amount exceeding Rs12 million