ByThe Federal Board of Revenue (FBR) has announced the new salary tax slabs for the tax year 2024, effective from July 1, 2022, to June 30, 2023. This article provides a detailed explanation of these tax slabs and how they impact your taxable income.
Here’s a breakdown of the salary tax slabs for the tax year 2023:
| Annual Salary (Rupees) | Tax Rate (2023) |
|---|---|
| Upto 600,000 | 0% |
| 600,001 – 1,200,000 | 2.5% of the amount exceeding Rs. 600,000 |
| 1,200,001 – 2,400,000 | Rs. 15,000 + 12.5% of the amount exceeding Rs. 1,200,000 |
| 2,400,001 – 3,600,000 | Rs. 165,000 + 20% of the amount exceeding Rs. 2,400,000 |
| 3,600,001 – 6,000,000 | Rs. 405,000 + 25% of the amount exceeding Rs. 3,600,000 |
| 6,000,001 – 12,000,000 | Rs. 1,005,000 + 32.5% of the amount exceeding Rs. 6,000,000 |
| Above 12,000,000 | Rs. 2,955,000 + 35% of the amount exceeding Rs. 12,000,000 |
How to Calculate Your Tax Liability
- Determine Your Gross Annual Salary: This includes your basic salary, allowances, bonuses, and other income.
- Identify Your Tax Slab: Based on your gross annual salary, pinpoint the relevant tax slab from the table above.
- Calculate Taxable Income: Subtract any eligible tax exemptions and deductions from your gross annual salary.
- Apply the Tax Rate: Apply the corresponding tax rate to your taxable income.
- Calculate Tax Liability: Multiply the taxable income by the tax rate to determine your total tax liability.
Example:
If your annual salary is Rs. 1,500,000, you fall into the second tax slab. Your tax liability would be:
- Rs. 15,000 + 12.5% of (Rs. 1,500,000 – Rs. 1,200,000) = Rs. 52,500
Free Salary Tax Calculator:
To simplify the tax calculation process, we’ve created a free salary tax calculator. Simply input your annual gross salary, and the calculator will automatically determine your tax liability.
To calculate taxes on salary for current tax year you can use Salary Income Tax Calculator
Key Considerations
- Tax Exemptions and Deductions: Be aware of various tax exemptions and deductions that can reduce your taxable income. These might include deductions for health insurance, education expenses, and charitable donations.
- Tax Withholding: Your employer is responsible for withholding taxes from your salary and remitting them to the FBR.
- Tax Filing: You must file an annual income tax return to declare your income and pay any outstanding taxes.
- Professional Advice: If your financial situation is complex or you need personalized guidance, consulting a tax professional is recommended.
By understanding these tax slabs and factors, you can effectively manage your tax obligations and make informed financial decisions.
