Tag: budget proposal

  • Budget 2023-24: How much tax will you pay on your salary?

    Budget 2023-24: How much tax will you pay on your salary?

    Finance Minister Ishaq Dar presented a comprehensive budget proposal of Rs14.46 trillion for the fiscal year 2023-24, emphasising an expansionary approach. One of the key highlights of the proposal was a substantial increase in the salaries of government employees, aimed at providing much-needed relief.

    In order to ensure that the burden on the salaried class remained unchanged, the coalition government decided not to make any alterations to the existing tax slabs, which were approved in the previous year’s Finance Bill of 2022.

    Outlined below are the tax slabs for different income brackets:

    1. Income below Rs600,000 per year (Rs50,000 per month):

       – No tax will be deducted.

    2. Income between Rs600,000 to Rs1.2 million per year (Rs50,000 to Rs100,000 per month):

       – Tax will be levied at a rate of 2.5 per cent on the amount exceeding Rs600,000.

    3. Income between Rs1.2 million to Rs2.4 million per year (Rs100,000 to Rs200,000 per month):

       – Tax will be levied at a rate of Rs15,000 plus 12.5 per cent on the amount exceeding Rs1.2 million.

    4. Income between Rs2.4 million to Rs3.6 million per year (Rs200,000 to Rs300,000 per month):

       – Tax will be levied at a rate of Rs165,000 plus 20 per cent on the amount exceeding Rs2.4 million.

    5. Income between Rs3.6 million to Rs6 million per year (Rs300,000 to Rs500,000 per month):

       – Tax will be levied at a rate of Rs405,000 plus 25 per cent on the amount exceeding Rs3.6 million.

    6. Income between Rs6 million to Rs12 million per year (Rs500,000 to 1,000,000 per month):

       – Tax will be levied at a rate of Rs1.005 million plus 32.5 per cent on the amount exceeding Rs6 million.

    7. Income exceeding Rs12 million per year (exceeding Rs1,000,000 per month):

       – Tax will be levied at a rate of Rs2.955 million plus 35 per cent on the amount exceeding Rs12 million.

    These tax slabs have been carefully designed to ensure a fair and balanced approach to income taxation, considering various income brackets. By maintaining consistency with the previous year’s tax slabs, the government aims to alleviate the burden on the salaried class while still generating the necessary revenue for public welfare and development initiatives.

    Overall, the budget proposal presented by Finance Minister Ishaq Dar reflects the government’s commitment to supporting government employees and maintaining a progressive tax system that promotes economic growth and fairness.

    Tax slabs Annual income Monthly income Tax rate
    Slab 1 Below Rs600,000 Below Rs50,000 No tax deducted
    Slab 2 Rs600,000 – Rs1.2 million Rs50,000 – Rs100,000 2.5 per cent of the amount exceeding Rs600,000
    Slab 3 Rs1.2 million – Rs2.4 million Rs100,000 – Rs200,000 Rs15,000 + 12.5 per cent of the amount exceeding Rs1.2 million
    Slab 4 Rs2.4 million – Rs3.6 million Rs200,000 – Rs300,000 Rs165,000 + 20 per cent of the amount exceeding Rs2.4 million
    Slab 5 Rs3.6 million – Rs6 million Rs300,000 – Rs500,000 Rs405,000 + 25 per cent of the amount exceeding Rs3.6 million
    Slab 6 Rs6 million – Rs12 million Rs500,000 – Rs1,000,000 Rs1.005 million + 32.5 per cent of the amount exceeding Rs6 million
    Slab 7 Above Rs12 million Above Rs1,000,000 Rs2.955 million + 35 per cent of the amount exceeding Rs12 million
  • Govt increases defence budget by 16% to Rs1.8 trillion

    Govt increases defence budget by 16% to Rs1.8 trillion

    In response to the prevailing internal and external security challenges faced by Pakistan, the federal government has put forward a proposal for a substantial 16 per cent rise in the defence budget. According to the budget document, the allocation for defence in the fiscal year 2023-24 is projected to be Rs1,804 billion, signifying an increase from the revised defence spending of Rs1,591 billion assigned for the outgoing fiscal year.

    Experts opine that the justification for a 15.7 per cent surge in the defence budget stems from the record inflation and devaluation of the rupee against the dollar witnessed over the past year. A detailed examination of the budget reveals that the figure of Rs1,804 billion excludes Rs563 billion designated for retired military personnel pensions, Rs280 billion for the armed forces development program and other crucial expenses, and Rs58 billion for UN peacekeeping missions.

    According to the 2023-24 budget document, out of the total defence allocation, Rs705 billion has been set aside for employee-related expenses, Rs442 billion for operational costs, Rs461 billion for local purchases and import of arms and ammunition, and Rs195 billion for civil works. Interestingly, all three branches of the military—the army, navy, and air force—have received equal budget increments, albeit with the army receiving the largest share due to its size and role.

    Pakistan’s defence spending currently accounts for 1.7 per cent of its GDP, representing a decline compared to the previous year. In the 2022-23 fiscal year, defence spending constituted around 2 per cent of the country’s GDP, which expanded due to the reevaluation of the economy.

    When comparing the average spending per soldier, Pakistan allocates $13,400, while India dedicates $42,000, Saudi Arabia $371,000, Iran $23,000, and the United States allots a substantial $392,000 annually. It is important to note, however, that the disparity lies in the significant disparity in the sizes of their respective economies compared to Pakistan’s.

    Defence expenditure has consistently been a topic of discussion, with some advocating for greater transparency and open debate regarding the military budget. In recent years, the government has provided more detailed information about the defence budget. Nevertheless, there has been no open parliamentary debate on the subject. Observers argue that the increase in the defence budget is warranted, considering the imminent external and internal security challenges faced by the country.

    Despite the withdrawal of US troops from neighbouring Afghanistan, Pakistan continues to deploy a substantial number of troops along its western border and erstwhile tribal areas to combat the threat of terrorism. Similarly, tensions persist between Pakistan and India, although the restoration of a ceasefire has provided some respite.