June 13, 2023 (MLN): The Government of Pakistan announced the budget for 2024-25 on Wednesday. Here is an overview of key changes that you need to know:
The federal budget for FY25 has a total outlay of Rs18.877 trillion, a 30% increase compared to the previous year’s budget.
Gross Revenue receipts are expected at Rs17.8tr, a significant jump of 46% YoY from the previous year's revised estimates.
Real GDP growth is expected at 3.6% in FY25 while Nominal GDP is expected to grow 17% to Rs124.15tr.
The average rate of inflation is expected to be 12%.
Relief for Govt Employees
The government has proposed to increase the minimum monthly wage from Rs32,000 to Rs37,000.
Salaries for government employees from grades 1 to 16 would be increased by 25% and by 20% for those in grades 17 to 22.
Moreover, it is proposed to increase the pension of retired employees by 15%.
Personal Income Tax
For salaried class, those earning an annual income of up to Rs600,000 would remain exempted from tax.
However, all the other income tax slabs for salaried individuals have been revised, resulting in significantly higher taxation across all income levels.
| Salaried Class – Filers | |
|---|---|
| Taxable Income | Tax Rate |
| Not exceeding Rs600,000 | 0% |
| Rs600,000 – 1,200,000 | 5% of the amount exceeding Rs600,000 |
| Rs1,200,000 – 2,200,000 | Rs30,000 + 15% of the amount exceeding Rs1,200,000 |
| Rs2,200,000 – 3,200,000 | Rs180,000 + 25% of the amount exceeding Rs2,200,000 |
| Rs3,200,000 – 4,100,000 | Rs430,000 + 30% of the amount exceeding Rs3,200,000 |
| Rs4,100,000 | Rs700,000 + 35% of the amount exceeding Rs4,100,000 |
Here is how the revised tax rates would affect the net salary:
For non-salaried class, those earning an annual income of up to Rs600,000 would remain exempted from tax.
However, all the other income tax slabs for salaried individuals have been revised, with progressive tax rates ranging from 15-45%.
| Non-Salaried Class – Filers | |
|---|---|
| Taxable Income | Tax Rate |
| Not exceeding Rs600,000 | 0% |
| Rs600,000 – 1,200,000 | 15% of the amount exceeding Rs600,000 |
| Rs1,200,000 – 1,600,000 | Rs90,000 + 20% of the amount exceeding Rs1,200,000 |
| Rs1,600,000 – 3,200,000 | Rs170,000 + 30% of the amount exceeding Rs1,600,000 |
| Rs3,200,000 – 5,600,000 | Rs650,000 + 40% of the amount exceeding Rs3,200,000 |
| Rs5,600,000 | Rs1,610,000 + 45% of the amount exceeding Rs5,600,000 |
Higher Tax Rates for Late Filers
There will be higher tax rates for late filers. At present, non-filers are subjected to higher tax rates to make their cost of doing business higher as well as to compel them to file their returns.
Now a new tax rate for a new category of persons who are late filers.
The government defined late filers as people who become filers after the due date of filing of return only for the sake of a specific transaction to avoid higher rates for non-filers.
For such late filers, a new tax rate is being introduced which is higher rate as compared to filers but lower than the non-filers.
Income Tax on Immovable Properties
On the purchase of property, there will be progressive tax rates categorized into three categories.
| Value of Property | Tax Rate for Filers | Tax Rate for Late-Filers | Tax Rate for Non-Filers |
|---|---|---|---|
| Up to Rs50 million | 3% | 6% | 12% |
| Rs50 million – 100 million | 3.5% | 7% | 16% |
| Above Rs100 million | 4% | 8% | 20% |
On the sale of immovable property, there will be progressive advance tax rates categorized into three categories.
| Value of Property | Tax Rate for Filers | Tax Rate for Late-Filers | Tax Rate for Non-Filers |
|---|---|---|---|
| Up to Rs50 million | 3% | 6% | 10% |
| Rs50 million – 100 million | 4% | 7% | 10% |
| Above Rs100 million | 5% | 8% | 10% |
The budget also proposed a flat 15% rate of tax on gains from the disposal of immovable property acquired on or after July 01, 2024 by filers regardless of the holding period.
For non-filers, the government proposed progressive tax rates based on the prescribed slab rates in Division I of Part I of the First Schedule, with a minimum tax rate of 15%.
Capital gains tax (CGT) on securities
Securities acquired on or after July 01, 2024 will be taxed at a flat rate of 15% for filers, regardless of holding period.
For non-filers, the gain will be taxed at normal rates with taxable slabs ranging from 15-45%.
Furthermore, capital gains income from mutual funds and collective investment schemes is also enhanced from 10% to 15%.
Dividend Income from Mutual Funds
The rate of dividend derived from a mutual fund which earns 50% or more of its income from profit on debt is proposed to be enhanced from 15% to 25%.
This is being done to reduce the arbitrage between individual persons deriving income from profit on debt and persons earning dividend income from mutual funds deriving income from profit on debt.
Higher taxes on mobile phones
Mobile phones are to be taxed at a standard rate of 18%. While mobile phones valued at more than $500 will remain chargeable at the existing rate of 25%.
Moreover, the government has proposed to enhance the withholding tax rate from 15% to 75% on the use of mobile phones for persons whose names are appearing in the income tax general order for non-filing of return even after issuance of notice.
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Posted on: 2024-06-13T12:17:18+05:00
