A draft amendment to the Law on Individual Income Tax has been submitted for a first reading at a bimonthly session of the National People's Congress Standing Committee.

The amendment, which aims to achieve fairer income distribution, proposes raising the threshold of personal income tax from 3,500 yuan ($544) to 5,000 yuan per month, or 60,000 yuan per year.

In addition, the draft amendment introduces special deductible items such as children's education, continuing education, the treatment of serious diseases, housing loan interest and rent into the Law on Individual Income Tax for the first time. These special expense deductions take people's actual living expenses and economic burden into consideration, which will be conducive to easing the burden on taxpayers and building a fairer tax system.

Tax on personal income was the third major contributor to China's total tax revenue, accounting for 8.3 percent of China's overall tax revenue in 2017.

Since the Law on Individual Income Tax took effect in 1980, it has been revised six times and the minimum threshold has been raised several times. The last time was in 2011, when the threshold was raised from 2,000 yuan to 3,500 yuan.

It is expected the revision to the Law on Individual Income Tax this time will significantly help reduce the tax burden on low-and middle-income groups, and raise people's disposable income and promote domestic consumption.