Islamabad, June 12, 2024 – The government on Wednesday presented the budget for the fiscal year 2024-25, which includes revised tax slabs for business individuals and Associations of Persons (AOPs).
The Finance Bill 2024 introduces a progressive tax regime for business individuals ad AOPs that aims to balance the burden of taxation across different income groups while promoting fairness and economic growth.
The new tax slabs for business individuals and AOPs, set to take effect in the tax year 2025, are as follows:
1. Income up to Rs. 600,000: No tax will be levied on taxable income not exceeding Rs. 600,000. This zero percent rate is designed to provide relief to small business owners and low-income earners, ensuring they are not overburdened by taxes.
2. Income from Rs. 600,001 to Rs. 1,200,000: Taxable income within this range will be taxed at a rate of 15% on the amount exceeding Rs. 600,000. This tier aims to gradually introduce tax obligations while remaining mindful of the income bracket’s capacity.
3. Income from Rs. 1,200,001 to Rs. 1,600,000: For income falling within this slab, the tax will be Rs. 90,000 plus 20% of the amount exceeding Rs. 1,200,000. This progressive increase helps in scaling the tax responsibilities with growing income.
4. Income from Rs. 1,600,001 to Rs. 3,200,000: Taxpayers in this category will face a tax of Rs. 170,000 plus 30% of the amount exceeding Rs. 1,600,000. This ensures a more substantial contribution from higher earners without being excessively punitive.
5. Income from Rs. 3,200,001 to Rs. 5,600,000: The tax rate here is Rs. 650,000 plus 40% of the amount exceeding Rs. 3,200,000. This slab significantly ramps up the tax burden, reflecting the government’s aim to garner more revenue from higher-income individuals.
6. Income exceeding Rs. 5,600,000: For the highest earners, the tax is Rs. 1,610,000 plus 45% of the amount exceeding Rs. 5,600,000. This steep rate is intended to ensure that the wealthiest contribute a fair share to the national exchequer.
The introduction of these revised tax slabs for business individuals and AOPs marks a pivotal step in the government’s efforts to enhance revenue collection while fostering a more equitable tax system. By easing the tax load on lower-income brackets and progressively increasing rates for higher incomes, the Finance Bill 2024 seeks to address income inequality and support economic stability.
