ISLAMABAD: Pakistan has imposed an additional tax rate on wealthy people to fight poverty.
The country presented its federal budget for the 2022/2023 financial year on June 10, 2022. The budget was presented in the midst of a severe financial crisis.
READ MORE: Finance bill defines beneficial owner under tax laws
Finance Minister Miftah Ismail has urged high income earners to contribute to poverty reduction by paying an additional amount of tax.
A separate section was introduced in the Income Tax Ordinance 2001 to levy an additional tax on persons earning more than Rs 300 million per annum.
READ MORE: Pakistan cuts payroll tax brackets to 7 in 2022/23 budget
The Finance Bill 2022 proposed the insertion of a new Section 4C into the Income Tax Order 2001 for the purposes of:
“4C. High-income tax for the reduction of poverty.― (1) A tax is imposed for the reduction of poverty for the tax year 2022 and beyond at the rates specified in Section IIB of Part I of the First Schedule, on the income of each person.
(2) For the purposes of this section, “income” is the sum of the following:
READ MORE: Massive reduction in subsidies to reduce current expenditure
(i) profits on debt, dividends, capital gains, brokerage and commissions;
(ii) taxable income (other than deferred depreciation and deferred business losses) under section 9 of the Ordinance, if not included in clause (i);
(iii) Attributable Revenue as defined in clause (28A) of Section 2, excluding the amounts specified in clause (i); and
(iv) calculated revenues, other than deferred amortization, deferred amortization and business losses carried forward under the Fourth, Fifth and Seventh Schedules.
READ MORE: Oil tax to generate 750 billion rupees
(3) Tax due under subsection (1) shall be paid, collected and deposited on the time and in the manner specified in subsection (1) of section 137 and all provisions of Chapter X of the Ordinance apply. apply. .
(4) If the tax is not paid by a person liable to pay it, the Commissioner shall, by order in writing, determine the tax payable and serve on that person a notice of demand specifying the tax payable and in the period specified in article 137 of the Ordinance.
(5) Where the tax is not paid by a person liable, the Commissioner shall recover the tax due under subsection (1) and the provisions of Parts IV, X, XI and XII of Chapter X and Part I of the Chapter XI of the Ordinance applies, as far as possible, to the collection of tax as these apply to the collection of tax under the Ordinance.
READ MORE: FBR has set a tax collection target of Rs 7 trillion in 2022/2023
(6) The Council may, by notification in the Official Gazette, establish rules for the achievement of the objectives of this article.
High income tax for poverty reduction
The rate of tax under Section 4C is:-
|Income according to section 4C||Tax rate|
|When income does not exceed Rs. 300 million||0% of income|
|When income exceeds Rs. 300 million||2% of income|