Revised tax rates salary income for tax year 2025 will put additional burden 0f Rs. 70 billion on the salaried taxpayers
Government has presented Federal Budget for the fiscal year 2024-25 on 12th of June 2024 setting target tax collection of Rs.12,970 billion. Among other measures, there is a huge increase in proposed income tax rates specifically targeting the salaried class. The revised tax rates salary income, fiscal budget 2024-25 are expected to bring additional Rs.70 billion tax revenue from the salaried class.
Proposed Tax Rates for Salaried Individuals Fiscal Year 2024-25
The proposed revised tax rates salary income for the tax year 2025 are as under:-
| Sr |
Annual Income |
Tax Rate |
|
|
From |
To |
||
| 1 | – | 600,000 | 0 |
| 2 | 600,000 | 1,200,000 | 5% of amount exceeding Rs. 600,000 |
| 3 | 1,200,000 | 2,200,000 | 15% of income exceeding Rs. 1,200,000 plus Rs.30,000 |
| 4 | 2,200,000 | 3,200,000 | 25% of income exceeding Rs. 2,200,000 plus Rs. 180,000 |
| 5 | 3,200,000 | 4,100,000 | 30% of income exceeding Rs. 3,200,000 plus Rs. 430,000 |
| 6 | 4,100,000 | 35% of income exceeding Rs. 4,100,000 plus Rs. 700,000 | |
The salary income up to Rs.50,000 per month (Rs.600,000 per annum) has been kept exempt like previous years.
For the persons having annual salary income exceeding Rs. 600,000 (Rs. 50,000 per month) and up to Rs. 1,200,000 per annum will have to pay tax at 5% of income exceeding Rs.600,000.
The persons falling in the income slab from Rs.1.200,000 to 2,200,000 (Rs.100,000 to 183,333 per month) will have to pay tax at the rate of 15% of income exceeding Rs.1,200,000 plus Rs. 30,000.
The salaried individuals having annual income exceeding Rs. 2,200,000 and up to Rs. 3,200,000 (Rs.183,333 to Rs. 266,666 per month) will have to pay tax at the rate of 25% of income exceeding Rs. 2,200,000 plus Rs. 180,000.
Where annual income of a salaried individual exceeds Rs. 3,200,000 and is up to 4,100,000 (Rs. 266,666 to Rs. 341,666 per month), the person will be charged to tax at the rate of 30% of income exceeding Rs.3200000 plus Rs. 430,000.
In case annual salary income exceeds Rs. 4,100,000 (Rs. 341,666 per month), the rate of tax will be 35% of amount exceeding Rs. 4,100,000 plus Rs. 700,000.
Impact of Revised Tax Rates on Different Income Classes
The impact of revised tax rates on different income classes is elaborated in the following table:-
| Income Tax as per Revised Rates for FY 2024-25 (Tax Year 2025) | ||||
| Sr | Monthly salary | Annual salary | Annual Tax | Tax per month |
| 1 | 50,000 | 600,000 | – | 0 |
| 2 | 100,000 | 1,200,000 | 30,000 | 2,500 |
| 3 | 150,000 | 1,800,000 | 120,000 | 10,000 |
| 4 | 200,000 | 2,400,000 | 230,000 | 19,167 |
| 5 | 250,000 | 3,000,000 | 380,000 | 31,667 |
| 6 | 300,000 | 3,600,000 | 550,000 | 45,833 |
| 7 | 350,000 | 4,200,000 | 735,000 | 61,250 |
| 8 | 400,000 | 4,800,000 | 945,000 | 78,750 |
| 9 | 450,000 | 5,400,000 | 1,155,000 | 96,250 |
| 10 | 500,000 | 6,000,000 | 1,365,000 | 113,750 |
As elaborated in the above table, persons having salary income of Rs. 50,000 per month are exempt from tax. A person with monthly salary income of Rs. 100,000 will be charged with tax of Rs. 2,500 per month. Salary income of Rs. 150,000 per month will be charged to tax of Rs. 10,000 per month. Salaried individual with monthly income of Rs. 200,000 will pay tax of Rs. 19,167 per month. A person with monthly salary of Rs. 250,000 will pay Rs. 31,667 per month. A person with salary income of Rs. 300,000 per month will pay tax of Rs. 45,833 per month. Persons with monthly salary of Rs. 350,000 will pay Rs. 61,250 per month. Monthly salary of Rs.400,000 will be charged to tax of Rs. 78,750 per month. Salary income of Rs. 450,000 per month will be charged to tax of Rs. 96,250 per month and persons having salary income of Rs. 500,000 per month will have to pay income tax of Rs. 113,750 per month.
Comparison of Income Tax of Salaried Individuals at Existing and Revised Tax Rates
A comparison of income tax at existing and revised tax rates for different income brackets is given in the following table:-
|
Comparison of Income Tax at Existing and Revised Rates |
|||||
|
Sr |
Monthly salary | Annual salary | Tax Existing Rates (Tax Year 2024) | Tax Revised Rates (Tax Year 2025) |
Additional Tax |
| 1 | 50,000 | 600,000 | – | 0 | – |
| 2 | 100,000 | 1,200,000 | 15,000 | 30,000 | 15,000 |
| 3 | 150,000 | 1,800,000 | 90,000 | 120,000 | 30,000 |
| 4 | 200,000 | 2,400,000 | 165,000 | 230,000 | 65,000 |
| 5 | 250,000 | 3,000,000 | 300,000 | 380,000 | 80,000 |
| 6 | 300,000 | 3,600,000 | 435,000 | 550,000 |
115,000 |
| 7 | 350,000 | 4,200,000 | 600,000 | 735,000 | 135,000 |
| 8 | 400,000 | 4,800,000 | 765,000 | 945,000 | 180,000 |
| 9 | 450,000 | 5,400,000 | 930,000 | 1,155,000 | 225,000 |
| 10 | 500,000 | 6,000,000 | 1,095,000 | 1,365,000 | 270,000 |
Disclaimer
“The contents of this post are intended for informational and educational purposes only, and are based on data gathered by Team Fiscal Updates. It is important to note that the information provided here should not be relied upon as a reference for any legal documents. If you require assistance for legal decisions, it is recommended to seek proper professional advice. It may also be noted that the provisions of the Income Tax Ordinance 2001 have overriding effect on all other laws of the country and shall prevail in case of any contradiction in terms of Section 3 of the Ordinance”