INCOME TAX
What is the Income Tax ?
By name suggests, the income tax is the applicable tax on your income. Income earners pay it, which include self-employed persons, salaried individuals, and non-incorporated firms. It is among one of the significant sources of payroll generation for the government.
By section 4 under Income Tax Ordinance 2001, It is applicable to each person who has taxable income for every tax year upon the rates declared by government.
What is Tax Year ?
The tax year is a twelve months period from 1st July to 30th June and shall be marked by Calendar year under which the said date arrives.
What is Taxable Income in Pakistan ?
The taxable income is observed as the whole income of a person calculated within tax year after subtracting the whole of any allowances to deduct, e.g., Zakat, etc.
What is the Total Income ?
The total Income is sum of a person’s yearly income upon each of the income head.
What are the Income Heads in Pakistan ?
By Tax Ordinance 2001 , the income classified into different types which include Income from property, Salary, income from a business, income from any other sources or capital gains on investments.
The taxation structure of a country determines the strength of the economy. Under the law, it is a responsibility of the Pakistani citizens to declare their assets, document the annual tax returns and pay due taxes timely. The new tax reforms are announced while ago, to restructure the taxation system in Pakistan by making it easier, simpler and convenient in order to get people under tax net by encouraging them to document tax returns and pay the due taxes timely.
A common misconception is revolving among people that tax paying is optional. However, tax evasion is the criminal offense and the tax evader may be penalized for the violation of the law.
The tax regulations in Pakistan are defined in the Income Tax Ordinance 2001. The Federal Board of Revenue (FBR) is responsible to regulate the taxation system in the country. For documenting tax returns, a person must have NTN registration.
By Federal Budget of 2019-2020 presented by Government of Pakistan, following tax rates and tax slabs are applicable for salaried and non-salaried persons for the 2019-2020:
TAX SLABS FOR SALARIED PERSONS
If an individual’s income is under the ‘Salary’ head exceeds 75% of its taxable income, the mentioned below tax rates will be applied:
Taxable Income Rate of Tax:
1. If the taxable income remains below Rs. 600,000 – Income tax rate= 0%.
2. If taxable income surpasses Rs. 600,000 but below to Rs. 1,200,000 – Income tax rate= 5% on the amount above to Rs. 600,000.
3. If taxable income surpasses Rs. 1,200,000 but below to Rs. 1,800,000 – Income tax rate= Rs. 30,000 plus 10% on the amount above to Rs. 1,200,000.
4. If taxable income surpasses Rs. 1,800,000 but below to Rs. 2,500,000 – Income tax rate= Rs. 90,000 plus 15% on the amount above to Rs. 1,800,000.
5. If taxable income surpasses Rs. 2,500,000 but below to Rs. 3,500,000 – Income tax rate= Rs. 195,000 plus 17.5% on the amount above to Rs. 2,500,000.
6. If taxable income surpasses Rs. 3,500,000 but below to Rs. 5,000,000 – Income tax rate= Rs. 370,000 plus 20% on the amount above to Rs. 3,500,000.
7. If taxable income surpasses Rs. 5,000,000 but below to Rs. 8,000,000 – Income tax rate= Rs. 670,000 plus 22.5% on the amount above to Rs. 5,000,000.
8. If taxable income surpasses Rs. 8,000,000 but below to Rs. 12,000,000 – Income tax rate= Rs. 1,345,000 plus 25% on the amount above to Rs. 8,000,000.
9. If taxable income surpasses Rs. 12,000,000 but below to Rs.30,000,000 – Income tax rate= Rs. 2,345,000 plus 27.5% on the amount above to Rs. 12,000,000.
10. If taxable income surpasses Rs. 30,000,000 but below to Rs.50,000,000 – Income tax rate= Rs. 7,295,000 plus 30% on the amount above to Rs. 30,000,000.
11. If taxable income surpasses Rs. 50,000,000 below to Rs.75,000,000 – Income tax rate= Rs.13,295,000 plus 32.5% on the amount above to Rs. 50,000,000.
12. If taxable income surpasses Rs.75,000,000 – Income tax rate= Rs. 21,420,000 plus 35% on the amount above to Rs. 75,000,000.
TAX SLABS FOR NON-SALARIED PERSONS:
The mentioned below tax rates are imposed to the income of every association of people and individual, who doesn’t fall under the salary head:
Taxable Income Rate of Tax:
1. If the taxable income remains below Rs. 400,000 – Income tax rate= 0%.
2. If taxable income surpasses Rs. 400,000 but under Rs. 600,000 – Income tax rate= 5% on the amount above to Rs. 400,000.
3. If taxable income surpasses Rs. 600,000 but under Rs. 1,200,000- Income tax rate= Rs. 10,000 plus 10% on the amount above to Rs. 600,000.
4. If taxable income surpasses Rs. 1,200,000 but under Rs. 2,400,000 – Income tax rate= Rs. 71,000 plus 15% on the amount above to Rs. 1,200,000.
5. If taxable income surpasses Rs. 2,400,000 but under Rs. 3,000,000 – Income tax rate= Rs. 250,000 plus 20% on the amount above to Rs. 2,400,000.
6. If taxable income surpasses Rs. 3,000,000 but under Rs. 4,000,000 – Income tax rate= Rs. 370,000 plus 25% on the amount above to Rs. 3,000,000.
7. If taxable income surpasses Rs. 4,000,000 but under Rs. 6,000,000 – Income tax rate= Rs. 620,000 plus 30% on the amount above to Rs. 4,000,000.
8. If taxable income surpasses Rs. 6,000,000 – Income tax rate= Rs. 1,220,000 plus 35% on the amount above to Rs. 6,000,000.
ARE YOU LOOKING TOWARDS GETTING INCOME TAX RETURNS FILED?
Under the strict government policies regulations, it has become greatly necessary that you are fully compliant with the Pakistan’s taxation system. Fort Law Associates is a league of Professional tax consultants in Lahore and tax lawyers in all over Pakistan, who won’t just only give tax consultancy but also aid you in tax deduction and ensure about conditions in your favor. This will let you to focus your energy and time on the core business activities.
We have tax lawyers in Lahore and tax consultants in all over Pakistan work in the following segments in the area of tax consultancy:
-Individuals.
-Salaried Earner.
-Associations.
-Companies.
-Non-Profit Organization (NGOs).
We work by making a complete analysis of your accounts books, make your Income Statement, do essential amendments (if required) and finalize the Income Statement. After process completion, we document the Return of Income after discussion and getting approval by the client.
FORT LAW ASSOCIATES SERVICES:
We provide you mentioned below high-quality tax consultancy services for your compliance with the tax regulations:
• The strategy development and planning of your tax filing.
• Documenting of your Tax returns.
• National Tax Number registration for tax correspondence with FBR.
• Dealing with Taxation Authorities like taking clarifications, confirmations and approval from FBR.
• Wealth statement Preparation.
• Electronic Challan Payment and Preparation.
• Filing and Preparation of other tax statements (if required).
• provide guidance in FBR audit and Conduct tax audit.
• Guidance and Advisory on day to day tax issues of the clients.
• Manage appeals and objections.
• Guidance on Tax Deduction.
• Refunds of Income tax from the tax authorities for clients.
• Manage Tax exemptions for educational institutions and NGOs.
Give us a Call us today at +92-42-35960296, +92-300-8687859 to get NTN registration, income tax consultancy and documenting of income tax returns. We have proficient tax consultants in Lahore and proficient tax lawyers in all over Pakistan are ready to offer you the best unmatched services and legal guidance.