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Business & Finance

Budget 2023-24: ‘high earners’ to pay a higher income tax as govt revises rates

  • Budget proposals originally maintained income tax rates before govt amended the Finance Bill
Published June 26, 2023

After facing scathing criticism from the International Monetary Fund (IMF), the government of Pakistan revised the budget measures and imposed a higher income tax on what it sees as ‘high earners’ of the salaried group.

Business Recorder takes a look at how the tax payment will change for the salaried group in the coming fiscal year.

Here are the new income tax rates:

 New income tax rates applicable in Fiscal year 2023-24
New income tax rates applicable in Fiscal year 2023-24

  • The new income tax slabs for the salaried group under the amended Finance Bill 2023 revealed that a higher rate of income tax would now be applicable where annual taxable income exceeds Rs2,400,000 (Rs200,000 per month).

  • According to the amended Finance Bill 2023 issued by the Federal Board of Revenue (FBR) on Sunday, where taxable income exceeds Rs2,400,000 but does not exceed Rs3,600,000, the rate of tax would be Rs. 165,000 + 22.5% of the amount exceeding Rs.2,400,000.

  • There is no change in income tax rates for salaried individuals where taxable income exceeds Rs1,200,000 but does not exceed Rs.2,400,000.

  • Under the new slab, where taxable income exceeds Rs3,600,000 but does not exceed Rs.6,000,000, the rate of tax would be Rs 405,000 + 27.5% of the amount exceeding Rs.3,600,000.

  • The revised income tax slab for salaried class revealed that where taxable income exceeds Rs6,000,000, the rate of tax would be Rs 1,095,000 plus 35 percent of the amount exceeding Rs 6,000,000.

Here are the old income tax rates:

 Outgoing fiscal year’s income tax rates
Outgoing fiscal year’s income tax rates

Comments

Comments are closed.

Pakistani1 Jun 26, 2023 06:14pm
Several companies have changed the payment methods to indirectly pay their senior employees through payment for benefits/other expenses instead of cash salaries. These include Car, Petrol, Servant salaries, Entertainment allowance, Club fees and expenses, School fees, vacation, telephone, bonus, stock options etc. to name the obvious ones. There may be more creative names to pay higher salaries indirectly. Does the Finance Bill take the monetary value of these benefits while calculating salaries or charges for these benefits? Time to focus on these also if the government is serious in increasing tax revenue.
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Pakistani1 Jun 26, 2023 06:17pm
When the government talks about Salaried people is it talking about salaried employees in Private Sector or does it include Government employees also? There are many highly paid Government servants in Judiciary, Bureaucracy, Armed Forces, Para military forces etc. Are these employees subject to same income tax regime for their direct and indirect salaries as private sector?
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Builder Jun 26, 2023 10:24pm
@Pakistani1 Almost all perks and allowances are supposed to be included in tax calculation for salaried individuals. There may be companies violating it though.
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Retired Jun 26, 2023 11:26pm
@Pakistani1, how about focusing on agriculture, retail, real estate who don't pay any tax at all! Why squeezing the same segment which is already burdened with taxes! Furthermore, what benefits do I get as a private salaried tax payer? My children go to private school, I use private hospitals. I use my personal car for commute as public transport is non-existent. Where are my taxes being spent? Trust you me, if there was a way I wouldn't pay a dime to these corrupt rulers who use our money to rule and abuse us, travel in large conveys and force us off the road, everything paid up by our money!!! They are leeches at best, parasites at worst and the only tax payer in this country are those who are hostage to the system and have no way out! Bravo to any company which tires to provide benefit to it's employees by providing tax breaks. I'd cheer for such an organization!
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Muhammad Khizar Sohail Jun 27, 2023 08:46am
@Pakistani1, These are all specifically covered under the definition of perquisites in the Income Tax Ordinance 2001. Enforcement is what they need to do instead of harrasment.
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Punjabistani Jun 27, 2023 12:58pm
https://tribune.com.pk/story/2329940/fbr-helpless-against-four-million-tax-dodgers https://tribune.com.pk/story/881537/the-irony-cost-to-collect-tax-higher-than-tax-collection Read these 2 articles, you will find out why all this bull shit is happening to our economy. Punjabi tax choro ko pakro, ab bhi wakt hai.
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DM Jun 27, 2023 08:49pm
@Retired, yes this is right. They are only killing the private salaried people whose tax is deducted on gun point. But thousands of retailers, businesses, landlords, agricultural owners, rental car businesses and others are not being brought into tax net.
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Ahmed Ali Jun 27, 2023 08:52pm
Why squeezes existing tax payers ? Just because it requires no effort on the part of FBR? What about retailers and agriculture? No one touches them as these uneducated people are in Government. Keep screwing the skilled and educated and promote brain drain.
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Jamil H Siddique Jun 27, 2023 10:55pm
@Retired, I feel for and totally agree with you.
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Aamir Shahzad Jun 29, 2023 12:52pm
@Pakistani1, Only salaried people give taxes. These god damn so and in return what we get? nothing.
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Aamir Latif Jul 04, 2023 02:12pm
Instead GoP should have reduced taxes on salaries class as monetary benefit to high inflation instead of 35% raise plus increased taxation..??????
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Bilal Khawar Jul 13, 2023 01:37pm
@Pakistani1, Don't know about Armed forces, but Judges do bear the tax burden . Its deducted from their salary before its paid into thisr bank accounts. Tax rates are no different.
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Concerned Citizen Jul 27, 2023 02:16pm
What is the legal way to challenge this raise?
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