As per the Income tax ordinance passed by Government of Pakistan, following slabs and income tax rates will be applicable for salaried persons for the year 2017-2018:

1. Where the taxable salary income does not exceed Rs 400,000, the rate of income tax is 0%.

2. Where the taxable income exceeds Rs 400,000 but does not exceed Rs 500,000, the rate of income tax is 2% of the amount exceeding Rs 400,000.

3. Where the taxable income exceeds Rs 500,000 but does not exceed Rs 750,000, the rate of income tax is Rs. 2,000 + 5%of the amount exceeding Rs 500,000.

4. Where the taxable income exceeds Rs 750,000 but does not exceed Rs 1,400,000,the rate of income tax is Rs 14,500 + 10% of the amount exceeding Rs 750,000.

5. Where the taxable income exceeds Rs 1,400,000 but does not exceed Rs 1,500,000, the rate of income tax is Rs 79,500 + 12.5% of the amount exceeding Rs 1,400,000.

6. Where the taxable income exceeds Rs 1,500,000 but does not exceed Rs 1,800,000, the rate of income tax is Rs 92,000 + 15% of the amount exceeding Rs 1,500,000.

7. Where the taxable income exceeds Rs 1,800,000 but does not exceed Rs 2,500,000, rate of tax is Rs 137,000 + 17.5% of the amount exceeding Rs 1,800,000.

8. Where the taxable income exceeds Rs 2,500,000 but does not exceed Rs 3,000,000, the rate of income tax is Rs 259,500 + 20% of the amount exceeding Rs 2,500,000.

9. Where the taxable income exceeds Rs 3,000,000 but does not exceed Rs 3,500,000, the rate of income tax is Rs 359,500 + 22.5% of the amount exceeding Rs 3,000,000.

10. Where the taxable income exceeds Rs 3,500,000 but does not exceed Rs 4,000,000, the rate of income tax is Rs 472,000 + 25% of the amount exceeding Rs 3,500,000.

11. Where the taxable income exceeds Rs 4,000,000 but does not exceed Rs 7,000,000, the rate of income tax is Rs 597,000 + 27.5% of the amount exceeding Rs 4,000,000.

12. Where the taxable income exceeds Rs 7,000,000, rate of tax is Rs 1,422,000 + 30% of the amount exceeding Rs 7,000,000

**Solution**

Assume that our annual income is given in cell A2, we shall apply the following formula to include all 12 tax brackets. (There should be no [break or Enter key pressed] in between the the formula components).

[Download the Excel file from here]

=IF(A2<=400000,0,

IF(A2<=500000,(A2-400000)*0.02,

IF(A2<=750000,(A2-500000)*0.05+2000,

IF(A2<=1400000,(A2-750000)*0.1+14500,

IF(A2<=1500000,(A2-1400000)*0.125+79500,

IF(A2<=1800000,(A2-1500000)*0.15+92000,

IF(A2<=2500000,(A2-1800000)*0.175+137000,

IF(A2<=3000000,(A2-2500000)*0.20+259500,

IF(A2<=3500000,(A2-3000000)*0.225+359500,

IF(A2<=4000000,(A2-3500000)*0.25+472000,

IF(A2<=7000000,(A2-4000000)*0.275+597000,

(A2-7000000)*0.3+1422000)))))))))))