Income tax 2024: Calculate your salary deductions starting July 1

The Finance Bill 2024, effective July 1, introduces varied tax rates and fixed taxes based on income brackets


News Desk July 03, 2024
Income tax 2024: Calculate your salary deductions starting July 1

Effective from July 1, the Finance Bill 2024 introduces major tax reforms aimed at increasing revenue. These changes impact the salaried class with varied tax rates and fixed taxes based on income brackets.

Key Points of the new tax regime

1. Exemption and initial tax brackets

  • Individuals earning up to Rs50,000 per month (or Rs600,000 annually) are exempt from income tax.
  • Monthly incomes up to Rs100,000 will be taxed at 5%, affecting annual incomes between Rs600,000 and Rs1.2 million. This results in a monthly tax of Rs2,500, up from Rs1,250.

2. Mid-range incomes

  • Annual incomes between Rs1.2 million and Rs2.2 million will incur a 15% tax rate plus a fixed annual tax of Rs30,000.
  • Monthly earners of Rs183,344 will pay a 15% tax, amounting to Rs15,000 per month, an increase from Rs11,667.

3. Higher income brackets

  • Those earning between Rs2.2 million and Rs3.2 million annually will face a 25% tax rate and a fixed tax of Rs180,000 annually.
  • Individuals with a monthly income of Rs267,667 will be taxed 25%, resulting in Rs36,083 monthly, up from Rs28,770.

4. Top-tier incomes

  • Annual incomes from Rs3.2 million to Rs4.1 million are subject to a 30% tax rate and a fixed tax of Rs430,000 annually.
  • Monthly earners of Rs341,667 will now pay 30%, or Rs58,333 per month, up from Rs47,408.
  • Salaries exceeding Rs4.1 million per annum will be taxed at 35%, with a fixed annual tax of Rs700,000.

5. Surcharge

  • A 10% surcharge is applied to incomes over Rs10 million for individuals and Associations of Persons (AOPs).
Monthly Income Annual Income Income Tax Rate Fixed Annual Tax Previous Monthly Tax New Monthly Tax
Up to Rs 50,000 Up to Rs 600,000 0% Rs 0 Rs 0 Rs 0
Rs 50,001 - Rs 100,000 Rs 600,001 - Rs 1,200,000 5% Rs 0 Rs 1,250 Rs 2,500
Rs 100,001 - Rs 183,344 Rs 1,200,001 - Rs 2,200,000 15% Rs 30,000 Rs 11,667 Rs 15,000
Rs 183,345 - Rs 267,666 Rs 2,200,001 - Rs 3,200,000 25% Rs 180,000 Rs 28,770 Rs 36,083
Rs 267,667 - Rs 341,666 Rs 3,200,001 - Rs 4,100,000 30% Rs 430,000 Rs 47,408 Rs 58,333
Above Rs 341,666 Above Rs 4,100,000 35% Rs 700,000 - -
Above Rs 833,333 Above Rs 10,000,000 10% Surcharge - - -

 

Impact and government’s goal

These measures are expected to increase the tax burden on higher-income earners, reducing their disposable income. The government aims to boost revenue collection through these revised tax rates, reflecting broader fiscal policies in the Finance Bill 2024.

Changes in vehicle taxation

The Finance Bill 2024 also revises the taxation on locally manufactured vehicles. Shifting from a fixed tax rate to a value-based system, the new regime taxes vehicles based on their value rather than a fixed amount.

These updates, effective from July 1, 2024, represent a significant shift in the government's approach to taxation, aiming for a more equitable revenue generation method.

COMMENTS (4)

Abrar Hussain | 2 weeks ago | Reply The Minimum limit exempted from tax should be 75000 month and tax rates on higher income should be increased more . Further if salaried person payed tax then why he is not considered to be filer as regard to the salary income .
Ayesha Sadozai | 2 weeks ago | Reply These IMF dictated onerous taxes plus even heavier indirect taxes on essential goods services and utilities will only further crush and destroy the salaried classes and the 95 general masses. A few rich and privileged elites continue to save their own skins . This government must realize its folly and sheer cruelty. Stop this farce. Or resign.
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