Islamabad, June 12, 2024 –Pakistan has increased tax rates for both salaried and business individuals in the newly presented budget for the fiscal year 2024-25.
The revised tax structure, introduced on Wednesday, reflects the government’s efforts to address the country’s economic challenges.
Revised Tax Rates
For Non-Salaried Individuals and Associations of Persons: The new tax regime introduces five taxable slabs for non-salaried individuals and associations of persons, applying progressive tax rates ranging from 15% to 45%. The specific rates are as follows:
Up to Rs. 600,000: No tax
Above Rs. 600,000: The tax rate starts at 15% and increases progressively to a maximum of 45%.
For Salaried Individuals: The tax structure for salaried individuals also features five taxable slabs beyond the Rs. 600,000 annual income threshold, with progressive tax rates from 5% to 35%. The detailed rates are:
Up to Rs. 600,000: No tax
Above Rs. 600,000: The tax rate starts at 5% and increases progressively to a maximum of 35%.
Impact and Rationale
The decision to revise the tax rates is part of a broader fiscal strategy to enhance tax revenue and reduce the budget deficit. The government aims to strike a balance between raising necessary funds and ensuring that the tax burden is distributed equitably.
For non-salaried individuals, the higher tax rates on the upper income brackets reflect an effort to capture a greater share of revenue from those with higher earning capacities. This approach is intended to create a more progressive tax system that aligns with principles of fairness and equity.
Similarly, for salaried individuals, the adjusted tax rates aim to ensure that higher earners contribute a fair share to the national exchequer. The initial tax-free threshold up to Rs. 600,000 is maintained, providing relief to lower-income earners while increasing the tax burden on higher-income brackets.
The new tax measures in the 2024-25 budget underscore Pakistan’s commitment to addressing its fiscal challenges through a revised taxation framework. By increasing tax rates for both salaried and non-salaried individuals, the government seeks to enhance revenue collection and create a more balanced and equitable tax system. These changes are expected to have significant implications for taxpayers across the country as they adjust to the new fiscal policies.
