The government has imposed higher taxes on people with salaries, introducing new income tax brackets for the fiscal year 2024-25.
Here are the main changes:
- The tax exemption limit stays at Rs600,000 per year.
- Those earning between Rs600,000 to Rs1,200,000 annually will see their tax rate increase from 2.5% to 5%.
- Individuals making between Rs1,200,000 to Rs2,200,000 yearly (which translates to Rs100,000 to Rs183,344 per month) will face a 15% tax rate, plus an additional fixed tax of Rs30,000.
- For instance, someone earning Rs150,000 monthly (Rs1,800,000 yearly) will pay Rs120,000 in taxes annually, leaving them with Rs140,000 after deductions.
- Additionally, those earning between Rs2,200,000 to Rs3,200,000 per year (up to Rs267,667 per month) will be taxed at a 25% rate, plus an additional Rs180,000.
- A person earning Rs250,000 monthly (Rs3 million yearly) will pay Rs380,000 in taxes annually, approximately Rs31,667 monthly.
- Individuals earning between Rs3,200,000 to Rs4,100,000 per year will pay a fixed tax of Rs430,000, along with a 30% tax on income exceeding Rs3,200,000.
- For those making above Rs4,100,000 yearly, a fixed tax of Rs700,000 plus a 35% tax on income exceeding Rs4,100,000 will be imposed.
The government kept the existing six tax brackets but adjusted the tax rates. Previously, the 35% tax rate applied to monthly incomes over Rs600,000 (Rs7,200,000 per year), while lower brackets had a 27.5% tax rate.
In this fiscal year, Pakistan’s salaried individuals contributed Rs158 billion in taxes, ranking as the fourth-largest income tax contributors. Reports suggest this amount was 243% higher than taxes paid by the wealthiest subsidized exporters.
