The president gave assent to the Finance Bill 2024 on the advice of Prime Minister Shehbaz Sharif under Article 75 of the Constitution. The Finance Bill 2024 is now effective from today.
The new taxation measures will significantly increase the tax burden on the salaried class, particularly affecting mid-management and technical professionals, adding to the financial strain caused by inflation and reduced take-home pay.
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Under the Finance Bill 2024, new tax rates have been introduced on various income brackets.
Income tax on salary up to Rs100,000 per month has been increased to 5 per cent, which will be applicable on income of Rs600,000 to Rs1,200,000 per annum.
Under this category, the salaried class will pay tax of Rs2,500 per month instead of Rs1,250.
The tax rate will be 15% on annual income of Rs1,200,000 to Rs2,200,000, this group will also have to pay a fixed tax of Rs30,000.
Those with a monthly salary of Rs183,344 will have to pay 15 percent tax, the monthly income tax of these people has been increased from Rs11,667 to Rs15,000.
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A 25% income tax has been imposed on annual income of Rs2.2 million to Rs3.2m. The employees under this category have to pay fixed tax of Rs180,000 annually.
Income tax will be 25% on monthly salary of Rs267,667, The monthly tax for this category has increased from Rs28,770 to Rs36,083.
According to the Finance Bill 2024, the tax rate has been set at 30% on annual income of Rs3.2m to Rs4.1m. This category will also have to pay a fixed tax of Rs430,000.
Tax will be 30% on monthly salary up to Rs341,667, the monthly tax of these people has increased from Rs47,408 to Rs58,333.
Salary above Rs4.1m per annum is taxed at the highest rate of 35%, this category has to pay a fixed tax of Rs700,000 per annum.
Individuals will pay 10% surcharge on income above Rs10m.
The implementation of these new taxes may cause financial difficulties for the salaried class and the public will face more financial burden.
Coupled with decreasing purchasing power, the substantial increase in tax rates for middle-income individuals is expected to make it more difficult to retain talent and may accelerate the brain drain from Pakistan.
