ISLAMABAD: The budget 2019-20, as presented by the PTI government, for the first time in the country’s history will practically reduce from July 1, 2019 the take home salary of officers, both civil and military, from Basic Pay Scale (BPS) 17 to 22.
Finance ministry sources said that the government’s decision to withdraw increased limit of taxable ceiling from present Rs1.2m per annum to Rs0.6m from next fiscal year, will reduce the take home salary of BPS-17 to BPS-22 officers despite the 5% raise announced for the BS-17 to BS-20 officers.
These sources said that the impact of reduction in tax slab to Rs0.6m from Rs1.2m will not only undo the 5% raise announced for BPS-17 to BPS-20 officers but will further negatively impact in term of their present take home salaries. The BPS-21 and BPS-22 officers have not been offered any raise but they will only face the salary cut because of additional deduction of tax from their salaries.
According to one source the impact of the salary reduction will vary from minimum Rs1,500 to Rs12,000 from grade-17 to 22 but calculation of a senior income tax official source shows that the decrease in salary will be far more.
A finance ministry official shared a table showing a comparison of take home salary of an officer of BPS-18 as on 30.06.2019 with 31.07.2019. The table shows that the take home salary of BPS-18 officer in June 2019 is Rs152,869, which will be reduced to around Rs151,100 in July 2019. It’s a decrease of almost Rs1,800 with effect from July 2019 for BPS 18 officer.
The finance ministry source said that from grade 17 to 22, the impact of this reduction will vary from minimum Rs1500 to Rs12000. However, a BPS-20 officer belonging to the income tax department told this correspondent that according to his calculation the downward revision in the tax slab will decrease his net monthly salary to Rs16,937 whereas the net annual decrease in the salary will be Rs203,248.
In case of BPS-21 and BPS-22 officers, reduction in take home salary will be far higher because they have not been given any raise.
As per the calculation of the income officer, the decrease in the BPS-17 to BPS-22 officers’ salary will be far more than the impact shared with this correspondent by finance ministry sources. A table of comparison between what the BPS-20 officer is getting now and what he will receive from next fiscal year, shows that the BPS-20 officer will get Rs5,033 as ad hoc relief announced in the budget but the income tax reduction which is Rs4,956 presently will shoot up to Rs26,926 per month from July 2019.
The Budget 2019-2020 has proposed 10% increase as ad hoc relief in the salaries of civilian and military employees from grade 1 to 16 and 5% in the salaries of grade 17 to 20 employees. No increase has been proposed in the salaries of grade 21 to 22 employees.
The FBR has proposed tax rate of 5 to 35 percent on twelve different slabs of salaried class through Finance Bill 2019-20. The government in the budget also announced to withdraw increased limit of taxable ceiling to Rs0.6 million from Rs1.2 million per annum. The Finance Bill 2019 had proposed that where taxable income does not exceed Rs600,000, the tax rate would be zero.
Now, where taxable income is over Rs600,000, but less than Rs1,200,000, there the income tax will be 5 percent of the amount exceeding Rs600,000, while in case of an income over Rs1,200,000, but under Rs1,800,000, the individual will have to pay Rs30,000 plus 10 percent of the amount exceeding Rs1,200,000 as income tax.
Where taxable income is above Rs1,800,000, but not over Rs2,500,000, the tax to be paid will be Rs90,000 plus 15 percent of the amount exceeding Rs1,800,000. Where taxable income oversteps Rs2,500,000, but does not pass Rs3,500,000, there will be Rs195,000 plus 17.5 percent of the amount exceeding Rs2,500,000.
(This news/article originally appeared in The News on June 14th, 2019)