ISLAMABAD: Budget 2022-23 of Pakistan was put on the floor of Parliament all you need to be aware of Budget FY 2022-23 is depicted exhaustively beneath the post. Finance Minister Mr. Miftah Ismail reveal the spending plan for 2022-23 on the house floor. This post will discuss the pivotal features of Taxation (Proposed amendments in Tax ordinance 2001 & Finance Bill FBR Pakistan).
Tax Slab Rates For SALARIED
In the budget for the fiscal year 2022-23, the government has reduced the tax rate from 5% to 2.5% upon monthly income above PKR 50,000/- to PKR 100,000/- income slab.
Additionally, the government has issued a revised list of income tax slabs for salaried individuals. Earlier, there were 12 slabs, which have now been reduced to seven.
| Taxable Income | Tax Liability |
|---|---|
| Where the taxable income doesn’t exceed PKR 600,000/- | PKR 0/- |
| Where the taxable income exceeds PKR 600,000/- but doesn’t exceed PKR 1,200,000/- | 2.5% of the amount exceeding PKR 600,000/- |
| Where the taxable income exceeds PKR 1,200,000/- but doesn’t exceed PKR 2,400,000/- | PKR 15,000 + 12.5% of the amount exceeding PKR 1,200,000/- |
| Where the taxable income exceeds PKR 2,400,000/- but doesn’t exceed PKR 3,600,000/- | PKR 165,000 + 20% of the amount exceeding PKR 1,200,000/- |
| Where the taxable income exceeds PKR 3,600,000/- but doesn’t exceed PKR 6,000,000/- | PKR 405,000 + 25% of the amount exceeding PKR 3,600,000/- |
| Where the taxable income exceeds PKR 6,000,000/- but doesn’t exceed PKR 12,000,000/- | PKR 1005,000 + 32.5% of the amount exceeding PKR 6,000,000/- |
| Where the taxable income exceeds PKR 12,000,000/- | PKR 2,955,000 + 35% of the amount exceeding PKR 12,000,000/- |
Tax Rate For Individuals & AOP
In the budget for the fiscal year 2022-23, the government has enhanced the exempt slab rate from PKR 400,000 to PKR 600,000.
Additionally, the government has issued a revised list of income tax slabs for salaried individuals. By increasing the exempt tax slab for individuals and AOP.
| Taxable Income | Tax Liability |
|---|---|
| Where the taxable income doesn’t exceed PKR 600,000/- | PKR 0/- |
| Where the taxable income exceeds PKR 600,000/- but doesn’t exceed PKR 800,000/- | 5% of the amount exceeding PKR 600,000/- |
| Where the taxable income exceeds PKR 800,000/- but doesn’t exceed PKR 1,200,000/- | PKR 10,000 + 12.5% of the amount exceeding PKR 800,000/- |
| Where the taxable income exceeds PKR 1,200,000/- but doesn’t exceed PKR 2,400,000/- | PKR 60,000 + 17.5% of the amount exceeding PKR 1,200,000/- |
| Where the taxable income exceeds PKR 2,400,000/- but doesn’t exceed PKR 3,000,000/- | PKR 270,000 + 22.5% of the amount exceeding PKR 2,400,000/- |
| Where the taxable income exceeds PKR 3,000,000/- but doesn’t exceed PKR 4,000,000/- | PKR 405,000 + 27.5% of the amount exceeding PKR 3,000,000/- |
| Where the taxable income exceeds PKR 4,000,000/- but doesn’t exceed PKR 6,000,000/- | PKR 680,000 + 32.5% of the amount exceeding PKR 4,000,000/- |
| Where the taxable income exceeds PKR 6,000,000/- | PKR 1,330,000 + 35% of the amount exceeding PKR 6,000,000/- |
Tax Reduction In Behood Certificates
Currently profit from investment in Behbood savings certificates, pensioners benefit accounts, and Shuhada family welfare accounts are taxed at a maximum rate of 10%. In order to provide further relief to pensioners, it shall be taxed at a maximum rate of 5%.
Tax On IT-Enabled Services Exported Abroad
Certain changes have been enacted from 1st July 2022 onward. The previous tax exemption provision has been removed by FBR Pakistan. Where up to the period ending on the 30th day of June 2025 a tax exemption was given to promote the freelance IT sector, with the condition of eighty percent of the export proceeds is brought into Pakistan in foreign exchange remitted from outside Pakistan through normal banking channels.
Tax On Freelance Income or IT-enabled services
In the Finance act 2022 FBR Pakistan imposed a tax on IT-enabled services exported abroad with FTR and you can also opt for NTR. read about how IT services shall tax u/s 154A.
Advance (WHT) Tax On Educational Expenses
Another relief measure taken is withholding tax on educational expenses which is 5% of the amount exceeding PKR 200,000 annually. Now it has been withdrawn the withholding tax on educational expense payments.
Tax On Property (Rental) Income
Any person who has more than one immovable property exceeding Rs.25 million situated in Pakistan shall be deemed to have received rent equal to 5% of the fair market value of the immovable property and shall pay tax at the rate of 1% of the fair market value of the said property.
Exceptions: However, rental properties where calculated income tax is equal to or above as mentioned in this section, self-owned business premises are used for business activity, self-owned agricultural land used for agricultural activity (except farmhouse), Registered land development, and construction projects of builders.
Tax Implication On Property Income
How a deemed income from the unused immovable assets will be taxed and exemptions available in certain cases. Also, read about how rental income will tax u/s 15A.
Capital Gain & WHT Tax On Immovable Property
Capital gain in all classes of assets is now proposed to be taxed at 15% in case, the holding period of such property is one year or less. The capital gain payable on such assets will reduce to zero after a holding period of 6 years, reducing tax liability by 2.5 % with each subsequent year.
| Assets | Open Plots & Shares/Securities | Constructed Property | Flats |
|---|---|---|---|
| Holding period | Tax rate | Tax rate | Tax rate |
| Up to 1 year | 15% | 15% | 15% |
| Up to 2 year | 12.5% | 10% | 7.5% |
| Up to 3 year | 10% | 7.5% | – |
| Up to 4 year | 7.5% | 5% | – |
| Up to 5 year | 5% | – | – |
| Up to 6 year | 2.5% | – | – |
| Above 6 years | – | – | – |
Furthermore, the advance tax rate on the purchase and sale of property for filers is proposed to be enhanced to 2% from the current 1%. Moreover, in order to discourage the undocumented economy, the advance tax rate for buyers of immovable property who are non-filers is proposed to be enhanced to 7%.
Advance (WHT) Tax On Luxury Vehicles
Advance tax on motor vehicles exceeding 1600cc is proposed to be increased. Furthermore, advance tax shall also be collected at the rate of 2% of the value in cases of high-value hybrid and electric vehicles. Additionally, the rate of tax for non-filers shall be enhanced to 200% from the current 100%.
Advance (WHT) Tax On International Card Payments
Advance withholding tax at the rate of 1% for filers and 2% for non-filers shall be collected from persons remitting money outside Pakistan through credit, debit, and prepaid cards. However, this tax shall be adjustable against tax liability.
