ISLAMABAD: The federal government has reversed its decision to exempt middle-income groups from taxation, caving in to the demands of International Monetary Fund (IMF). Miftah Ismael termed the decision necessary on Friday for the release of IMF’s tranche of $1 billion.
In order to fill the revenue gap, the government decided to squeeze the salaried class further by raising tax rates to collect Rs35 billion from this already distressed section of the population.
As per details, following an understanding agreed with the IMF, the government has introduced a slab of Rs600, 000 to Rs1.2 million and those part of it will have to pay a 2.5 percent tax on their income.
People whose incomes ranging between Rs1.2 million to Rs2.4 million, there will be a fixed tax of Rs 15,000 and an additional 12.5 percent income tax. A 20 percent tax and Rs165,000 will be payable by those having earnings between Rs2.4 million to Rs3.6 million.
For incomes ranging between Rs3.6 million and Rs6 million, 25 percent tax will be imposed along with a fixed payment of Rs405,000.
Those earning between Rs6 million to Rs12 million will have to pay over Rs1 million fixed amount in addition to 32.5 percent income tax while those having income over Rs12 million will pay 35% income tax along with Rs2.9 million fixed amount. The new tax slabs will be applicable from July 01.
Previously, the government had announced in the budget that Rs100 will be charged from those having a personal earning of up to 1.2 million annually, thus giving the salaried class a big relief whose yearly earnings are below 1.2 million.
