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| June 18, 2006 | Sunday | Jumadi-ul-Awwal 21, 1427 |
Tax rate reduced for high-salaried officers
ISLAMABAD, June 17: The government has drastically reduced the income tax liability of the high-salaried taxpayers including secretaries, army generals and those appointed against special grades in the last two budgets.
Official statistics available with Dawn indicated that the tax wizard of the Central Board of Revenue (CBR) in the last two budgets gave more relief to the high class, while no tangible relief was given to the low grade employees, who were reeling under the ever increasing cost of living.
According to statistics, a salaried taxpayer whose per annum income was Rs102,000 (Rs8,500 per month) had got only Rs5 decrease per annum in their income tax rates following the new rates announced in the budget of 2005-06.
Similarly, the income tax liability of a taxpayer, whose per annum income was Rs960,000 (Rs80,000 per month), had substantially reduced by Rs7,150 per annum.
This showed that even last year, the revised rates were made in a fashion to extend maximum relief to the highly paid salaried class than the lowest paid ones.
Working on the same line, this year the tax wizards again came up with a new idea of taxing the gross salary of taxpayers with an inherent agenda to further extend relief to the upper class of this country.
The tax wizards were of the view that the new proposed 20 different slabs as against the existing four slabs would facilitate the taxpayers in computing of their taxation liabilities.
Contrary to their claims, according to the new proposed system, if a taxpayer is getting a gross salary of Rs200,000 per annum his income tax has reduced by Rs667 per annum. While a taxpayers getting a salary of Rs3.7 million per annum, his taxation liability would reduced by Rs200,000 per annum because of the new system.
Interestingly, the new systems also proposed increase in tax liabilities of upper middle level salaried taxpayers — if a taxpayer is getting a gross salary of Rs25,000 per month his income tax will increase by Rs1,000; in case of over Rs50,000 per month an increase of Rs8,500 and over Rs70.833 per month an increase of Rs7.333 per annum.
This was wrong perception creation by the government that the income tax exemption limit has been raised from current Rs100,000 to Rs150,000 in the budget. It was raised to accommodate the so-called exemption available to the salaried class on house rents etc. and it was not because of giving any relief to taxpayer.
A chartered accountant by profession, Kashif Aziz Jahangiri Mr Jahangiri said the concept of ‘pay-as-you-earn’ was changed under the budget to ‘pay-as-you-receive’ whether you make any income or loss.
According to a senior tax official, the new system was not discussed with any stakeholder to seek their comment or opinion and was finalised by a few tax officials before it was announced through the finance budget 2006.
Gross salary Reduction or increase
Salary taxpayers tax liability in taxation liabilities
Existing Proposed
200,000 1,167 500 667
300,000 3,500 2,250 1,250
300,001 3,500 4,500 (1,000 increase)
450,000 5,500 15,750 (250 increase)
600,000 27,500 27,000 500
600,001 27,500 36,000 (8,500 increase)
850,000 69,167 63,750 5,417
850,001 69,167 76,500 (7,333 increase)
1,200,000 147,500 132,000 15,500
1,200,001 147,500 150,000 (2,500 increase)
1,500,000 231,500 187,500 44,000
1,500,001 231,500 210,000 21,500
2,000,000 371,500 300,000 71,500
3,700,000 847,500 647,500 200,000
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