Tag: income tax slabs

  • Revised tax slabs: Here’s how much tax you will pay on your salary

    Revised tax slabs: Here’s how much tax you will pay on your salary

    The Finance Bill 2024 has ushered in a significant overhaul of income tax slabs affecting salaried individuals, resulting in a marked increase in taxation across various income brackets.

    The revised slabs, delineated in the amended bill, indicate substantial alterations compared to the previous structure.

    Outlined below are the revised income tax slabs juxtaposed with their previous counterparts:
    Taxable Income Tax  per cent Taxable Income (yearly)
    ≤600,000 0 less than 600,000
    600,001-1,200,000 5 per cent of amount exceeding Rs600,000 600,001-1,200,000
    1,200,001-2,200,000 Rs30,000 + 15 per cent of amount exceeding Rs1,200,000 1,200,001-2,400,000
    2,200,001-3,200,000 Rs180,000 + 25 per cent of amount exceeding Rs2,200,000 2,400,001-3,600,000
    3,200,001-4,100,000 Rs430,000 + 30 per cent of amount exceeding Rs3,200,000 3,600,001-6,000,000
    >4,100,000 Rs700,000 + 35 per cent of amount exceeding Rs4,100,000 >6,000,000

    While the income tax exemption for the initial slab, encompassing annual salaries up to Rs600,000, remains unaltered, adjustments have been made to other income brackets. Notably, the maximum income tax slab has been notably reduced from Rs6 million to Rs4.1 million.

    Under the revised regime, individuals earning below Rs600,000 annually (equivalent to Rs50,000 per month) will continue to be exempt from income tax. However, for those falling within the range of Rs600,001 to Rs1,200,000 per year (Rs50,000 to Rs100,000 per month), the tax rate has been increased to 5 per cent from the previous 2.5 per cent on the amount exceeding Rs600,000.

    Moreover, individuals earning between Rs1,200,001 to Rs2,200,000 annually (equivalent to Rs100,000 to Rs183,333 per month) will now be subject to a tax of Rs30,000 plus 15 per cent of the amount exceeding Rs1.2 million.

    For those earning within the bracket of Rs2,200,001 to Rs3,200,000 per year (Rs183,333 to Rs266,667 per month), the revised tax stands at Rs180,000 plus 25 per cent of the amount exceeding Rs2.2 million.

    Likewise, individuals earning between Rs3,200,001 to Rs4,100,000 annually (Rs266,667 to Rs341,667 per month) will face a tax liability of Rs430,000 plus 30 per cent of the amount exceeding Rs3.2 million.

    Finally, for individuals with annual earnings surpassing Rs4,100,000 (more than Rs341,667 per month), the revised tax obligation stands at Rs700,000 plus 35 per cent of the amount exceeding Rs4.1 million.

    These revisions underscore a significant shift in the taxation landscape, potentially impacting the financial planning and obligations of salaried individuals across the board.

  • Amended Finance Bill 2023: How much tax will you pay on your income?

    Amended Finance Bill 2023: How much tax will you pay on your income?

    The National Assembly has passed an amended Finance Bill 2023, marking a significant milestone in the country’s ongoing financial saga. With the revised bill meeting the rigorous conditions set forth by the International Monetary Fund (IMF), hopes are high that this last-ditch effort will unlock a vital infusion of bailout funds.

    The IMF had previously voiced its disappointment with the country’s initial budget, deeming it a missed opportunity to implement a more progressive and comprehensive tax framework.

    However, determined to rectify this setback, Finance Minister Ishaq Dar introduced a series of new taxes and expenditure cuts, which were instrumental in garnering the Assembly’s approval.

    Undoubtedly, the standout feature of this momentous bill is the introduction of fresh taxation measures projected to generate an impressive Rs215 billion in revenue.

    In a bold move towards fairness and equity, the Finance Bill also sanctions an increase in tax rates for higher income brackets within both the salaried and non-salaried classes.

    Outlined below are the revised income tax slabs for the year 2023, reflecting a more balanced approach to income taxation:

    Taxable income range Tax rate
    Not exceeding Rs600,000 0% (Tax-free)
    Rs600,001 – Rs1,200,000 2.5% of the amount exceeding Rs600,000
    Rs1,200,001 – Rs2,400,000 Rs15,000 + 12.5% of the amount exceeding Rs1,200,000
    Rs2,400,001 – Rs3,600,000 Rs165,000 + 22.5% of the amount exceeding Rs2,400,000
    Rs3,600,001 – Rs6,000,000 Rs435,000 + 27.5% of the amount exceeding Rs3,600,000
    Exceeding Rs6,000,000 Rs1,095,000 + 35% of the amount exceeding Rs6,000,000

    1. Tax-free threshold:

    Individuals with a taxable income not exceeding Rs600,000 are exempt from income tax obligations.

    2. Progressive tax rates:

    For those with taxable incomes exceeding Rs600,000 but not surpassing Rs1,200,000, a tax rate of 2.5 per cent will be levied on the amount exceeding Rs600,000.

    3. Unchanged tax rate for salaried individuals:

    Salaried individuals with taxable incomes ranging from above Rs1,200,000 to Rs2,400,000 will continue to face a tax rate of Rs15,000 plus 12.5 per cent of the amount exceeding Rs1,200,000.

    4. Moderate income brackets:

    Taxpayers with taxable incomes exceeding Rs2,400,000 but not surpassing Rs3,600,000 will experience a tax rate of Rs165,000 plus 22.5 per cent of the amount exceeding Rs2,400,000.

    5. Higher income brackets:

    Individuals falling within the income range of Rs3,600,000 to Rs6,000,000 will face a tax rate of Rs435,000 plus 27.5 per cent of the amount exceeding Rs3,600,000.

    6. Top earners:

    Those with taxable incomes exceeding Rs6,000,000 will be subject to a tax rate of Rs1,095,000 plus 35 per cent of the amount exceeding Rs6,000,000.

    With this bold and progressive tax structure, the Finance Bill 2023 promises to forge a more equitable financial landscape.

    As the nation eagerly awaits the release of the much-needed bailout funds, this resolute step taken by the National Assembly stands as a testament to the government’s determination to safeguard the country’s economic well-being and chart a path towards sustainable growth.