Amendments in the Finance Act 2018’s Income Tax Ordinance, introduced by the federal government, have been approved by the federal cabinet in a meeting, chaired by Prime Minister (PM) Imran Khan on Thursday.
According to the amendments in the act, the burden of taxable income has been reduced for the salaried persons. For an annual salary of 0.4 million rupees, no tax will be applied, while for Rs400,000 to Rs800,000 annual salary, tax will be Rs1,000.
According to the new amendment, for those who earn Rs800,000 million to Rs1,20,0000 annual salary, will have to pay Rs2,000 tax. Meanwhile, for those earning from Rs1.2 million to 2.4 million rupees, five per cent additional tax will be applied.
For those earning Rs2.4 million to 4.8 million rupees, tax will be Rs 60,000 and 10 per cent additional tax will be applied. For those earning more than Rs4.8 million yearly, a fixed tax of Rs300,000 is payable in addition to 15 per cent of the salary amount above this limit.
The tax rate, applicable to ‘small companies,’ has been reduced even further. Starting from 2018, the tax rate charged would be reduced by one per cent each year, making it 25 per cent for 2018, down to 20 per cent from 2023 and onwards, as per the Federal Board of Revenue.