ISLAMABAD: In the budget for the fiscal year 2024-25, the federal government proposed exempting individuals earning up to Rs600,000 annually from paying income tax.
Finance Minister Muhammad Aurangzeb presented the proposed changes during the budget session in the National Assembly (NA), emphasizing the need for personal tax reforms. Aurangzeb announced that the new tax target is set at Rs 12.97 trillion, representing a 38% increase year-on-year.
He proposed maintaining the tax exemption for incomes up to Rs600,000 annually and suggested not raising the maximum tax slab for the salaried class, while introducing changes to the tax slabs:
- Those earning between Rs600,000 and Rs1.2 million annually will be taxed at 5% of their income.
- Individuals earning Rs2.2 million per annum will face a fixed tax of Rs30,000, plus an additional 10% income tax on amounts exceeding Rs1 million.
- Those earning between Rs2.2 million and Rs3.2 million will be taxed at Rs1.8 lakh (fixed) plus 25% on amounts exceeding Rs1 million.
- Individuals earning between Rs3.2 million and Rs4.1 million will be taxed at Rs4.3 lakh (fixed) plus 30% on amounts exceeding Rs9 lakh.
- Those earning above Rs4.1 million will be taxed at Rs7 lakh (fixed) plus 35% on the excess amount.
Despite financial constraints, the government decided to provide 25 percent ad-hoc relief in salaries for employees from Grade 1-16 and 20 percent for those in Grade 17-22 to enhance their purchasing power. Additionally, the minimum wage will be increased from Rs32,000 to Rs37,000 per month.
