ISLAMABAD, July 12: The Central Board of Revenue (CBR) has issued instructions for computation of income tax payable by salaried taxpayers for the tax year 2007 and deduction of advance tax from the salary for the tax year commencing from July 1, 2006.
The instructions were issued through an income tax circular on Wednesday. The circular says that tax in the case of a salaried taxpayer shall be computed in accordance with sections 12, 13 and 14 of Income Tax Ordinance 2001, read with rules 2 to 7 of Income Tax Rules 2002.
A salaried taxpayer means where salary constitutes more than 50 per cent of the total income. All perquisites, allowances or benefits — except those covered under Part-I of the Second Schedule to the Ordinance — are to be included in the salary and rate of tax prescribed in Part-I of the First Schedule shall be applied for the tax year 2007 on the gross figure.
A fulltime teacher or a researcher, employed in a non-profit education or research institution as well as government training and research institutions will have a concession — his tax liability stood reduced by an amount equal to 75 per cent of tax payable on his income from salary.
The basic exemption for tax year 2006 was Rs100,000, which has been enhanced to Rs150,000 for the tax year 2007. The tax slabs have also been revised through Finance Act, 2006. These slabs shall be applicable for tax year 2007. For withholding purposes, these shall apply to salary paid on or after July 1, 2006.
The value of accommodation provided by the employer to the employee shall be taken as the amount which the employer would have paid to the employee in case the accommodation was not provided to him. In other words, for the purpose of calculation of value of the perquisite of housing, the amount of house rent that would have been paid by the employer (if house was not provided) shall be included in the salary for tax purposes. However, the value taken for this purpose will not be less than 45 per cent of the minimum of the time scale of the basic salary or the basic salary where there is no time scale.
