Karachi, January 2, 2024 – Pakistan has released the salary tax rates for the tax year 2024, outlining a progressive taxation structure.
These new rates released by the Federal Board of Revenue (FBR) – the apex tax collecting agency of Pakistan, aim to ensure a fair and equitable distribution of tax burdens while providing relief for low-income earners.
According to the FBR tax rate card for salary persons for the tax year 2024, individuals drawing an annual salary of Rs 600,000 or less will be exempted from income tax. The new tax rates for salary earners in 2024 are structured in a progressive manner, with varying rates based on different income brackets.
1. Taxable Income Up to Rs 600,000:
• Tax Rate: 0%
2. Taxable Income Exceeding Rs 600,000 but Not Exceeding Rs 1.2 Million:
• Tax Rate: 2.5% of the amount exceeding Rs 600,000
3. Taxable Income Exceeding Rs 1.2 Million but Not Exceeding Rs 2.4 Million:
• Tax Rate: Rs 15,000 fixed amount + 12.5% of the amount exceeding Rs 1.2 million
4. Taxable Income Exceeding Rs 2.4 Million but Not Exceeding Rs 3.6 Million:
• Tax Rate: Rs 165,000 fixed amount + 22.5% of the amount exceeding Rs 2.4 million
5. Taxable Income Exceeding Rs 3.6 Million but Not Exceeding Rs 6 Million:
• Tax Rate: Rs 435,000 fixed amount + 27.5% of the amount exceeding Rs 3.6 million
6. Taxable Income Exceeding Rs 6 Million:
• Tax Rate: Rs 1,095,000 fixed amount + 35% of the amount exceeding Rs 6 million
These progressive tax rates indicate a deliberate effort to ensure that individuals with higher incomes contribute proportionally more to the tax pool. The exemption for those earning up to Rs 600,000 is aimed at providing relief to low-income individuals.
The fixed amounts included in the tax rates serve as a base amount, ensuring that all individuals, regardless of their income level, contribute to the tax revenue. As the taxable income increases, the percentage of income subject to tax progressively rises.
The implementation of progressive taxation aligns with global best practices, promoting social justice and reducing the burden on those with lower incomes. It encourages a more equitable distribution of resources, fostering economic stability and inclusivity.
Taxpayers and financial experts are advised to carefully review the new tax rate card to understand the implications on their financial obligations. Additionally, staying informed about changes in tax regulations is crucial for effective financial planning.
The unveiling of the salary tax rates for 2024 reflects the government’s commitment to fostering a fair and efficient tax system that promotes economic growth while safeguarding the interests of the most vulnerable in society. As the year progresses, these tax rates will play a pivotal role in shaping the financial landscape for both individuals and businesses in Pakistan.
