Pakistan’s federal government has presented the 2024-25 budget, introducing significant changes in income tax to address the needs of inflation-affected individuals. Finance Minister Muhammad Aurangzeb emphasized the necessity of income tax reforms, citing recent implementations by the Federal Board of Revenue (FBR).
Income Tax Reforms
The minister proposed maintaining the income tax exemption for annual incomes up to Rs600,000. Additionally, while not increasing the maximum tax rate for the salaried class, the budget introduces changes to the tax brackets:
| Annual Income Range | Monthly Income | Previous Monthly Tax | New Monthly Tax |
|---|---|---|---|
| Rs600,000 – Rs1,200,000 | Rs100,000 | Rs1,250 | Rs2,500 |
| Rs1,200,000 – Rs2,200,000 | Rs183,000 | Rs11,650 | Rs15,000 |
| Rs2,200,000 – Rs3,200,000 | Rs267,500 | Rs28,750 | Rs35,834 |
For non-salaried individuals, the maximum tax rate is proposed to be set at 45%.
Budget 2024-25 Overview
The federal budget for 2024-25 has a total outlay of Rs18.9 trillion. It targets a 3.6% GDP growth and aims to generate Rs13 trillion in tax revenue. Key highlights include significant tax reforms, increased petroleum levies, and zero-rated imports for solar panel materials. The budget also aims to broaden the tax base, reduce inflation to 12%, and boost foreign investment.
The Public Sector Development Programme (PSDP) received a substantial increase, reflecting the government’s focus on economic development and fiscal consolidation. The Finance Minister lauded the government’s efforts in securing an IMF program and called for privatization and regulatory reforms to sustain economic growth.
