Islamabad, July 28, 2024 – Business individuals are required to file their annual returns for the tax year 2024 based on the tax rates updated until June 30, 2024, as released by the Federal Board of Revenue (FBR).
The FBR, through amendments in the Finance Act, 2024, revised the income slabs for business individuals and Association of Persons (AOPs), effective from July 1, 2024.
There has been some confusion among taxpayers falling under the category of business income regarding the correct entries for their annual returns by September 30, 2024. However, it is important to note that the return filing for the tax year 2024 will use the income slabs updated up to June 30, 2024.
Income Tax Rates for Return Filing 2024:
1. Where taxable income does not exceed Rs. 600,000: 0%
o Taxpayers in this bracket are exempt from paying any income tax.
2. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 800,000:
o Tax rate: 7.5% of the amount exceeding Rs. 600,000.
3. Where taxable income exceeds Rs. 800,000 but does not exceed Rs. 1,200,000:
o Tax rate: Rs. 15,000 + 15% of the amount exceeding Rs. 800,000.
4. Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000:
o Tax rate: Rs. 75,000 + 20% of the amount exceeding Rs. 1,200,000.
5. Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000:
o Tax rate: Rs. 315,000 + 25% of the amount exceeding Rs. 2,400,000.
6. Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000:
o Tax rate: Rs. 465,000 + 30% of the amount exceeding Rs. 3,000,000.
7. Where taxable income exceeds Rs. 4,000,000:
o Tax rate: Rs. 765,000 + 35% of the amount exceeding Rs. 4,000,000.
The updated tax rates aim to bring more clarity and fairness to the taxation process for business individuals and AOPs. The revision in the income slabs is part of the government’s broader tax reform agenda aimed at improving tax compliance and increasing revenue collection.
Finance Minister Muhammad Aurangzeb emphasized the importance of including the untaxed and under-taxed segments of the economy in the tax net. He highlighted that achieving certainty and ease of tax collection is essential for economic stability. The government’s efforts to reform the Federal Board of Revenue (FBR) are expected to play a significant role in enhancing revenue collection and facilitating taxpayers.
Aurangzeb also assured that the government is committed to placing less financial burden on the lower-income class while facilitating the business community. The refund of claims worth 68 billion rupees so far demonstrates the government’s dedication to supporting businesses.
Taxpayers are encouraged to carefully review the updated tax rates and ensure accurate entries in their annual returns to avoid any discrepancies. The FBR’s amendments and the government’s continued efforts to simplify the tax processes aim to create a more transparent and efficient tax system for all.
As the tax filing deadline approaches, business individuals and AOPs must stay informed about the updated tax rates and ensure timely and accurate filing of their returns for the tax year 2024.