New Salary Tax in Pakistan 2024-25 Budget: What You Need to Know

Budget 2024-25: Key Changes in Income Tax Deductions for Salaried Individuals

In a comprehensive federal budget presentation, Finance Minister Muhammad Aurangzeb unveiled Pakistan’s first budget for the fiscal year 2024-25. The budget totals a substantial Rs18.9 trillion and aims for a GDP growth rate of 3.6% in the coming year. A central aspect of this budget the ambitious tax collection target set for the Federal Board of Revenue (FBR), which aims to gather Rs12,970 billion—an impressive 38% increase from the previous year’s target.

A significant focus of this year’s budget is the restructuring of income tax slabs, particularly affecting non-salaried individuals, with tax rates reaching up to 45%. However, the government has decided to maintain the income tax exemption threshold at Rs600,000. Below are the detailed income tax slabs for the fiscal year 2024-25:

Income up to Rs600,000: Zero Tax

• Individuals earning up to Rs600,000 annually will not be subject to any income tax.

Income between Rs600,000 and Rs1,200,000: 15% Tax Rate

• For earnings within this range, a 15% tax rate will applied to the amount exceeding Rs600,000.

Income between Rs1,200,000 and Rs1,600,000: Rs90,000 Plus 20%

• A fixed tax of Rs90,000 plus an additional 20% on the amount exceeding Rs1,200,000 will imposed.

Income between Rs1,600,000 and Rs3,600,000: Rs170,000 Plus 30%

• Earnings in this bracket will incur a tax of Rs170,000 plus 30% on the amount exceeding Rs1,600,000.

Income between Rs3,600,000 and Rs5,600,000: Rs650,000 Plus 40%

• Individuals earning between Rs3,600,000 and Rs5,600,000 will pay Rs650,000 plus 40% on the amount exceeding Rs3,600,000.

Income exceeding Rs5,600,000: Rs1,610,000 Plus 45%

• For those earning more than Rs5,600,000, the tax will be Rs1,610,000 plus 45% on the amount exceeding Rs5,600,000.

These changes reflect the government’s strategy to enhance tax revenue while ensuring progressive taxation. The revised tax slabs aim to balance the fiscal needs of the state with the financial capacities of its citizens, particularly protecting lower-income individuals by keeping the exemption threshold intact.

The budget for 2024-25, with its revised tax slabs, represents a critical step towards achieving Pakistan’s fiscal goals. The new tax structure designed to boost revenue while maintaining fairness in the tax system. As these changes come into effect, individuals and businesses alike will need to adjust to the new financial landscape shaped by this budget.