Tag: Direct Tax

  • FBR surpasses revenue collection target by Rs15 billion for July

    FBR surpasses revenue collection target by Rs15 billion for July

    The Federal Board of Revenue (FBR) revealed the provisional revenue collection data for July 2022, which came to Rs458 billion.

    The FBR generated net revenues of Rs458 billion in July, which was Rs15 billion more than its goal of Rs443 billion.

    These collections—which represent an increase of roughly 10 per cent over the Rs417 billion collected during the same time last year—are the biggest ever for the month of July.

    The gross revenue increased from Rs438 billion in July of the previous year to Rs486 billion, a rise of 11 per cent. Similarly, the amount of refunds given out in July increased by 32 per cent to Rs28 billion from Rs21 billion paid in the previous year.

    Domestic taxes made up 55 per cent of the total collection while import taxes kept their 40 per cent share.

    Previously, 52–53 per cent of the total revenue was collected via taxes at the import stage. Similarly, the increase in domestic income tax is close to 31 per cent, which the FBR described as a dramatic move toward direct taxation.

    The Advance Tax collected in July has increased significantly. Due to the implementation of a withholding provision that is applicable regardless of the holding term, there is also a 118 per cent rise in the advance tax on the sale of properties under Section 236-C.

    Similarly, a change in the tax rate has led to a 40 per cent increase in Advance Tax under Section 147, particularly from financial companies.

    Raising the FED rate on tobacco and cigarettes has also paid off. Sales tax from the tobacco sector increased by a record-breaking 67 per cent, while the FED from tobacco saw a record-high growth of over 47 per cent, or Rs2.6 billion.

    Additionally, the FED for international flight travel has climbed by more than 200 per cent. Additionally, Pakistan Customs saw a modest 2.58 per cent increase in revenue under the heading of customs duty during July 2022 compared to Rs65 billion collected during the same time last year.

    However, it fell short of the Rs77 billion target set for July as a result of the government’s import compression policy, which aims to limit the outflow of US dollars.

    In addition, the FBR lost around Rs11 billion in sales tax due to the zero-rating of petroleum goods.

    It is important to note that the number of income tax returns for the tax year 2021 has increased by 13 per cent to 3.4 million from 3.0 million for the tax year 2020.

  • Here are the latest income tax rates and slabs for salaried class

    Here are the latest income tax rates and slabs for salaried class

    In the budget for fiscal year 2022-23, the government has exempted those earning up to Rs100,000 per month from paying income tax, up from Rs50,000 last year.

    For the salaried income group, the latest budget is a mishmash as the government reduced tax rates and the number of slabs while eliminating available credit through the omission of deductible allowance for profit on debt and tax credit for investment in shares, health insurance, and pension funds.

    Moreover, the government has released a revamped list of income tax brackets for salaried employees. There were previously 12 slabs, which have now been shrunk to seven.

    Here are the new slabs:

    1. For annual incomes less than Rs600,000 (below Rs50,000 per month)
    2. For a yearly income of Rs600,000-Rs1.2 million (Rs50,000 to Rs100,00 per month).
    3. For annual earnings of Rs1.2m-2.4m (Rs100,000 to Rs200,000 per month)
    4. For annual earnings of Rs2.4m-3.6m (Rs200,000 to Rs300,000 per month)
    5. For earnings of Rs3.6m-6m (Rs300,000 to Rs500,000 per month)
    6. For annual earnings of Rs6m-12m (Rs500,000 to Rs10,00,000 per month)

    For annual earnings of more than $12 million (more than $100,000 per month), income tax is not to be levied on people earning between 0 and Rs600,000 per year (where income from salary exceeds 75 per cent of taxable income). A nominal amount of Rs100 will be subtracted per year from those earning between Rs600,000 and Rs1.2 million.

    Employees getting paid more than Rs1.2 million but less than Rs2.4 million per year will be levied 7 per cent of the amount that exceeds Rs1,200,000 in the third slab.

    An employee getting paid Rs1,400,000 per year will be levied 7 per cent of Rs200,000 (Rs1,400,000 minus Rs1,200,000 since that is the amount exceeding Rs1,200,000).

    As per the latest budget resolution, the government recommended an income tax rate of 20 per cent on small business earnings, 42 per cent on banking, and 29 per cent on related companies.

  • Direct taxes target predicted at Rs2,560 billion for FY 22-23

    In an attempt to meet the Federal Board of Revenue’s (FBR) revenue collection target of Rs7,255 billion for the upcoming fiscal year, the direct taxes target has been predicted at Rs2,560 billion, up from Rs2,182 billion in 2021-22.

    According to Brecorder, the indirect taxes (net) estimates were predicted at Rs4,695 billion in the macroeconomic framework for 2022-23. Direct taxes forecasts included income tax and withholding taxes, whereas indirect taxes projections included sales tax, customs duty, and Federal Excise Duty (FED).

    The indirect tax goal for 2022-23 has been set at Rs4,695 billion, up from Rs3,647 billion in 2021-22, representing a Rs1,048 billion rise. The indirect tax revenue for the fiscal year 2021-22 was Rs3,440 billion.

    The entire collection of indirect taxes in 2020-21 was Rs3,008.2 billion. Direct taxes are expected to reach Rs2,560 billion in the next fiscal year, up from Rs2,182 billion in 2021-22, a Rs378 billion increase.

    Read more: PM Shehbaz directs to eliminate taxes on raw materials used by export industries

    During the first 11 months of the current fiscal, the FBR collected roughly Rs1.9 trillion in direct taxes. In the fiscal year 2020-21, direct tax collections totalled Rs1,726.0 billion. Withholding taxes account for 72 per cent of the total direct tax collection.