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The federal government has increased the income tax rate for people earning Rs100,000 or above per month in the federal budget for the fiscal year 2024-25.
The tax rate has increased from 2.5% to 5% for those earning between Rs600,000 and Rs1,200,000 per annum.
The government maintained the tax slabs to six, as the tax burden continues to increase on the inflation-burdened salaried class.
The salaried class paid Rs158 billion in taxes during the first half of the last fiscal year, becoming the fourth-largest income tax contributor.
Individuals might think twice before seeing their pay cheque at the start of the month as the new rates have further affected the post-tax earnings of people earning more than Rs600,000 per annum.
Here is your guide to quickly calculate how the new tax rate has affected your post-tax earnings and how much tax you will be paying annually.
We have also reproduced the next tax slab as laid out in the finance bill for FY 2024-25.
S. No | Annual taxable income | Tax rate (2024-25) |
|---|---|---|
1 | Taxable income does not exceed Rs600,000 | 0% |
2 | Taxable income exceeds Rs600,000 but does not exceed Rs1,200,000 | 5% of the amount exceeding Rs600,000 |
3 | Taxable income exceeds Rs1,200,000 but does not exceed Rs2,200,000 | Rs30,000 + 15% of the amount exceeding 1,200,000 |
4 | Taxable income exceeds Rs2,200,000 but does not exceed Rs3,200,000 | Rs180,000 + 25% of the amount exceeding Rs2,200,000 |
5 | Taxable income exceeds Rs3,200,000 but does not exceed Rs4,100,000 | Rs430,000 +30% of the amount exceeding Rs3,200,000 |
6 | Taxable income exceeds Rs4,100,000 | Rs700,000 + 35% of the amount exceeding Rs4,100,000 |
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.
