ISLAMABAD: Pakistan’s Federal Board of Revenue (FBR) has accepted income tax slabs and rates proposed by the Senate Standing Committee on Finance for the new financial year 2010-11, which begins next month.
The income tax slabs and rates proposed by the Senate Standing Committee on Finance seek to apply higher tax rates on higher incomes instead of middle level incomes in the upcoming fiscal year 2010-11, official sources said Sunday.
After reviewing the budget proposals contained in the Finance Bill, 2010, Senators Khurshid Ahmed, Ibrahim Khan and Afia Zia had proposed to the revised slabs of the applicability of income tax on income during 2010-11.
FBR Chairman Sohail Ahmed has conveyed to the members of the committee that there would be no negative revenue implications of the proposal and FBR will not have any objection to accept these slabs and income tax rates for 2010-11.
According to income tax slabs and rates proposed by the senators, when taxable income does not exceed Rs300,000 there would be no tax or income up to Rs300,000 would remain exempted from the income tax. The Senate body has proposed that where the taxable income exceeds Rs300,000 but does not exceed Rs500,000 income tax rate of 7.5 per cent should be applicable on it.
When the taxable income exceeds Rs500,000 but does not exceed Rs750,000 the income tax rate should be 10 per cent. Where the taxable income exceeds Rs750,000 but does not exceed Rs1 million income tax should be charged at 12.5 per cent on such income.
Where the taxable income exceeds Rs1 million but does not exceed Rs1.5 million the income tax rate should be 15 per cent on this income. When the taxable income exceeds Rs1.5 million the income tax rate should be fixed at 25 per cent on such income.
Earlier in the Finance Bill, 2010, the FBR had proposed the following income slabs and income tax rates applicable thereon. When the taxable income does not exceed Rs300,000 no tax would be applicable. Where the taxable income exceeds Rs300,000 but does not exceed Rs400,000 income tax rate of 7.50 per cent should be applicable on it.
When the taxable income exceeds Rs400,000 but does not exceed Rs500,000 the income tax rate should be 10 per cent. Where the taxable income exceeds Rs500,000 but does not exceed Rs600,000 income tax should be charged at 12.5 per cent on such income.
Where the taxable income exceeds Rs600, 000 but does not exceed Rs800,000 income tax rate should be 15 per cent. Where the taxable income exceeds Rs800,000 but does not exceed Rs1 million the income tax rate should be 17.50 per cent.
Where the taxable income exceeds Rs1 million but does not exceed Rs1.3 million, 21 per cent income tax would be applicable on this level of income. The highest slab of income proposed by the FBR in the Finance Bill, 2010 was eyeing 25 per cent income tax on income, which exceeds Rs1.3 million.
According to the procedure, amendments proposed in the Finance Bill, 2010 prepared by the Senate Standing Committee on Finance would be placed at first stage in the Senate of Pakistan and upon approval of these recommendations, these would be tabled in the National Assembly for approval and incorporation in the Finance Bill, 2010.
In case the National Assembly accepts these proposals, Federal Minister for Finance Dr Hafeez Sheikh would announce formal acceptance of these recommendations in his budget windup speech expected in last week of June 2010.
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