1. Home /
  2. Blog
  3. /
  4. Tax For Salaried Individuals

Tax for salaried individuals

author Befiler date
Tax for salaried individuals

The government of Pakistan has finalized tax slabs for salaried individuals for the fiscal year 2022-23 and has set a minimum income tax rate of 2.5% for those earning up to Rs. 100,000 per month and a maximum of 35% for individuals earning a monthly salary over Rs.1 million.

In the tax year 2021, a total of 1.2 million salaried individuals have filed their income tax returns out of which 333k individuals fall in the income tax slab of Rs. 50,000 per month. Individuals falling under that slab are still exempt.

However, amid all this negative news, there is some positive news for salaried individuals. Tax slabs for salaried individuals have been rationalized with a positive impact for salaried individuals drawing a monthly salary of up to Rs. 250,000. For example, salaried individuals having a monthly salary of Rs. 100,000 will now pay an annual tax of Rs. 15,000 as against the previously applicable tax of Rs. 30,000.

Following are the changes in tax laws recently enacted through the Finance Act 2022 that will impact salaried individuals:

Sr. No.Sr. No. Taxable income Existing Rate of TaxRate of Tax
11 Where taxable income does not exceed Rs. 600,000 0%
2Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,0002.5% of the amount exceeding Rs. 600,000
3Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000Rs. 15,000 + 12.5% of the amount exceeding Rs. 1200,000
4Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,600,000Rs 165,000 + 20% of the amount exceeding Rs. 2,400,000
5Where taxable income exceeds Rs. 3,600,000 but does not exceed Rs. 6,000,000Rs. 405,000 + 25% of the amount exceeding Rs. 3,600,000
6Where taxable income exceeds Rs. 6,000,000 but does not exceed Rs. 12,000,000Rs. 1,005,000 + 32.5% of the amount exceeding Rs. 6,000,000
7Where taxable income exceeds Rs. 12,000,000Rs. 2,955,000 + 35% of the amount exceeding Rs. 12,000,000

A comparison of tax impact on the salaries under previous and revised tax rates is presented as follows:

Annual Taxable SalaryTax Charge
Previous RevisedTax Impact
600,000
1,200,00030,00015,000(15,000)
2,400,000180,000165,000(15,000)
3,600,000390,000405,00015,000
6,000,000895,0001,005,000110,000
12,000,0002,345,0002,955,000610,000
18,000,0004,845,0005,055,000210,000
24,000,0005,645,0007,155,0001,510,000

Withdrawal of Tax Credits / Deductible Allowances

Following tax credits and allowances previously available to salaried and business individuals have been withdrawn effective tax year 2023:

  • Section 60C: Profit on debt incurred on house financing;
  • Section 62: Investment in new shares of listed companies, mutual funds or life insurance policies, Sukuks, etc.; and
  • Section 62A: Purchase of Health insurance policies.

Following are the details of common tax credits, allowances and advance withholding taxes that are available for adjustment against tax on salary:


Advance Tax

  • Advance Tax on Telephone, Internet, Mobile Bills
  • Advance Tax on International Credit Card Transactions
  • Advance Tax collected on electricity bills exceeding Rs. 25k in case of non-filers
  • Advance tax collected at the time of buying and selling of immovable property.

Advance tax on purchase of vehicle.
Excess advance tax (double tax) paid by non-filers on dividend, interest on savings, prize bonds and winnings etc.

Tax Credits & Allowances

  • Investment in Voluntary Pension Schemes (VPS);
  • Donation/zakat to approved charitable organizations; and
  • Allowance for educational expenses of children if your annual taxable salary is up to Rs. 1.5 million – lower of (a) 5% of tuition fee (b) 25% of taxable income and (c) 60,000 x no. of children.

Although the government has withdrawn the tax credit on investment in IPO investment, mutual funds, and life insurance and tax allowance available on profit on debt for acquisition / construction of house loan with effect from Tax Year 2023, there are still a lot of avenues available for salaried individuals to reduce their tax incidence through various tax credits, allowances and advance taxes collected / paid at source as discussed in foregoing paragraphs.

Categories
Loading...
Suggested Blog Posts
Loading...

Befiler

how to become tax filer in pakistan

online ntn registration in pakistan

Income Tax Return

File Taxes

E-filling & NTN Registration

The easiest & quickest way to become a filer online. Register NTN, file income tax, check your FBR tax return. Filing taxes in Pakistan has never been easier before.

Tax Questions & Tools

Salary Calculator

NTN Finder

FAQ

Blog

Contact Us

Tax Services

Befiler Tax Filing NTN Finder Salary Calculator income tax return tax refund tax preparation sales tax return filing e file income tax calculate tax return filing online file a tax return free tax online tax

accounts, amnesty, befiler, blog, business, calculator, capital, earning, excise, expense, fbr, filer, financial, house, income, invest, law, ntn, online, organization, pakistan, portal, property, returns, salary, sales, scheme, service, tax, withholding, AOP, Business registration, Online Preparing Tax Filing, NTN registration, NTN Verification, Salary tax calculator, FBR tax filing, Tax return, E-filing

logo dashboard image how to make ntn in pakistan how do i check my fbr return online benefit of filer pakistan how to open my fbr account without password atl status fbr fbr tax return last date pakistan income tax calculator last date for income tax returns pakistan salary tax pakistan taxation fbr tax rates pakistan sales tax rate ntn certificate fbr Befiler – Your Smart Tax Assistant for Income Tax Return Filing NTN Registration with Befiler is Fast and Easy! Why You Should Become A Filer Information Needed to File an Income Tax Return More Incentives, More Reasons to Become Filer Online Tax Filing Culture in Pakistan : A Trend on the Rise Befiler’s Role in Improving Tax Awareness and Education in Pakistan How Do I Become a Tax Filer in Pakistan? Federal Budget for Financial Year 2019 – 2020 TAX AMNESTY SCHEME 2019 TAX FILING FOR SALARIED INDIVIDUALS Important facts to know about NTN Registration Making Tax Simple for People Befiler Makes You a Tax Filer with Ease Pakistan’s Tax Culture Strategy for FBR Transformation and Enhancement of Tax Collections How I should Benefit from Becoming a Filer in Pakistan? Filing Income Tax Returns: Late Filing is Better than Non-Filing and Notices from FBR. File your Tax Returns Online with Befiler Calculation of Taxes on your Salary Tax Credit and Deductible Allowances: How can you Pay Less in Taxes and Save More? Exemptions and Tax Concession: How to Legitimately Remain Safe by Paying in Less or No Taxes Online Correspondence of Tax Notice: Real-time coordination with the Tax body: Nadra and FBR Joining Hands Together To Track And Hunt Non-Filers Sales Tax: Its Fundamental Concepts, Those Who Are Required to Register for Sales Tax, and Basics of Sales Tax Registration. Why you should integrate your POS System with FBR? Implications of Finance (Supplementary) Bill 2021; Get to know which commodities are going to get costlier! Single Sales Tax Returns: A New Sales Tax Returns Portal Finance Supplementary Act 2022 Business NTN Registration Process: How I can Register my Business NTN in Pakistan conveniently? Company Incorporation Process: How I can Register my Company in Pakistan with Ease? It’s the time to profile non-filers: FBR’s bid to launch “Asaan Tax Portal”. Offences, Penalties, and Prosecutions: You can land in hot water, if you failed to comply with filing tax returns. Withholding Taxes in Pakistan: Why it is Important to Educate Yourself, and how can You get a refund on your paid Withholding Tax Money? Calling out Freelancers: Government registering them for controlling Money Laundering Prime Minister’s relief package, a sigh of hope for the nation PM Imran Khan to distribute Rs. 407Bn Interest-Free Loan under Kamyab Pakistan Program Tax Amnesty Scheme 2022 Intellectual Property: Interesting and Relevant Things to Know About Topic: Companies: Its types, basics, purpose and registration benefits. Reviving Sicked Industrial Sectors through granting Tax Incentives FBR’s measures to facilitate people https://www.befiler.com/blog/?category=22&per_page=10 https://www.befiler.com/blog/?category=7&per_page=10 https://www.befiler.com/blog/?category=21&per_page=10 https://www.befiler.com/blog/?category=18&per_page=10 https://www.befiler.com/blog/?category=20&per_page=10 https://www.befiler.com/blog/?category=17&per_page=10 https://www.befiler.com/blog/?category=1&per_page=10