The federal government has imposed heavy taxes on the salaried class as it introduced new income tax slabs for the salaried class in the budget for the fiscal year 2024-25.
The key changes are as follows:
The tax exemption limit remains at Rs600,000 per annum.
For those earning between Rs600,000 to Rs1,200,000 per annum, the tax rate has been increased from 2.5%% to 5%.
For those earning between Rs1,200,000 to Rs2,200,000 (earning Rs100,000 to Rs183,344 per month) per annum, a 15% tax rate will be applied, in addition to this they will also pay a fixed tax of Rs30,000.
For example, someone earning Rs150,000 per month (Rs1,800,000 per annum) will pay Rs120,000 in taxes annually, or around Rs10,000 per month. The person would receive Rs140,000 after tax deduction.
Moreover, for those earning between Rs2,200,000 to Rs3,200,000 (earning up to Rs267,667) per annum, a 25% tax rate will be applied, in addition to this, they will also pay Rs180,000.
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Someone earning Rs250,000 per month (Rs3 million per annum) will pay Rs380,000 in taxes annually, or around Rs31,667 per month.
Furthermore, those earning between Rs3,200,000 to Rs4,100,000 per annum will pay a fixed tax of Rs430,000 and 30% on income above Rs3,200,000 will be levied.
For those earning above Rs4,100,000 per annum, a fixed tax of Rs700,000 plus 35% on income above Rs4,100,000 will be applicable.
The government has maintained the existing six tax slabs but has adjusted the tax rates. Previously, the 35% tax rate was applicable on monthly incomes above Rs600,000 (Rs7,200,000 per annum), while the lower slabs had a 27.5% tax rate.
Pakistan’s salaried class paid Rs158 billion in taxes in this fiscal year, becoming the fourth-largest income tax contributor.
According to media reports, the amount was 243% higher than the tax contribution by the richest subsidised exporters.
Last year, International Monetary Fund Managing Director Kristalina Georgieva urged the government to collect more taxes from the wealthy and protect the poor people.
“I believe this is in line with what people in Pakistan would like to see for the country,” she told a reporter on the sidelines of the United Nations General Assembly on September 22, 2023.
