CIRCULAR NO. 11 OF 2010, Islamabad, July 28, 2010

COMPUTATION OF INCOME TAX PAYABLE BY THE SALARIED TAXPAYERS FOR TAX YEAR 2010 - CHANGES MADE THROUGH THE FINANCE ACT 2010 - CLARIFICATIONS REGARDING. C.No.4(5)ITR/06 GOVERNMENT OF PAKISTAN REVENUE DIVISION FEDERAL BOARD OF REVENUE CIRCULAR NO. 11 OF 2010, Islamabad, July 28, 2010 Subject: COMPUTATION OF INCOME TAX PAYABLE BY THE SALARIED TAXPAYERS FOR TAX YEAR 2010 - CHANGES MADE THROUGH THE FINANCE ACT 2010 - CLARIFICATIONS REGARDING CIRCULAR NO. 11 OF 2010, Islamabad, July 28, 2010:- Computation of tax in the case of salaried persons is governed under the provisions of sections 12, 13 and 14 of Income Tax Ordinance 2001 read with rules 3, 4, 5, 6 and 7 of the Income Tax Rules 2002. In cases where salary income constitutes more than 50% of the total income of a taxpayer the total income of such taxpayers is chargeable to income tax at the rates provided in para (1A) of Part 1 of the First Schedule. All perquisites, allowances or benefits, [except those covered under Part-1 of the Second Schedule to the Ordinance], are to be included in the salary income. The taxation of salaried taxpayers in the light of amendments made in the Income Tax Ordinance, 2001 through Finance Act, 2010, is explained as under: 1. Increase in Basic Threshold. The basic exemption for salaried person has been enhanced from Rs.200,000/- to Rs.300,000/-. These changes have been brought through Finance Act, 2010 and will be applicable for the Tax Year 2011. However for withholding purposes these* shall apply to salary paid on or after 1st day of July, 2010. New rate card is reproduced as under: "TABLE S.No. Taxable Income Rate of tax (1) (2) (3) 1. Where the taxable income- does not exceed Rs. 300,000, 2. Where the taxable income exceeds o Rs.300 ,000 but does not exceed Rs.350 ,000, 0.75% .3. Where the taxable income exceeds 1.50% Rs.350,000 but does not exceed Rs.400,000, 4. Where the taxable income exceeds 2.50% Rs.400,000 but . does not exceed Rs.450,000, 5. . Where the taxable income exceeds 3.50% Rs.450,000 but does not exceed Rs.550,000, 6. Where the taxable income exceeds 4.50% Rs.550,000 but does not exceed Rs.650,000, 7. Where the taxable income exceeds 6.00% Rs.650,000 but does…