ISLAMABAD: The Federal Board of Revenue (FBR) has proposed income tax exemption on annual income of up to Rs 400,000.
The FBR has finalised, in principle, new income tax slab chart with reduction in slabs from 17 to 5 for announcement in the budget 2012-13.
New income tax slabs are expected to provide relief in tax to low and lower middle income groups and put additional burden on upper middle class and higher income groups of the country, sources said. The government is expected to announce enhancing income tax exemption threshold from existing Rs 350,000 to Rs 400,000 in the budget 2012-13.
According to sources, in the first slab, initial Rs 400,000 income would be exempted from income tax and no tax would be applicable on it.
Second slab is expected to start from over Rs 400,000 and would end at Rs 750,000 and 5 percent tax would be applicable on income above Rs 400,000 but less than Rs 750,000.
Third slab would consist of income over Rs 750,000, but less than Rs 1,500,000 and this slab would attract fixed tax rate of Rs 17,500 plus 5 percent tax on income exceeding Rs 500,000 up to Rs 1500,000.
Fourth slab would consist of income over Rs 1.5 million and up to 2.5 million and people having income between these slabs would be required to pay fixed income tax at the rate of Rs 92,500 plus 15 percent income tax on income exceeding Rs 1 million up to 1.5 million.
Fifth slab would consist of income starting from Rs 2.5 million and above. Those having income above Rs 2.5 million would be required to pay fixed tax of Rs 242,000, sources said.
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Last edited by Naveed A Lodhi; 06-02-2012 at 06:24 PM.