The recent changes in income tax rates for the salaried class in Pakistan have left many confused and concerned. The government had initially announced a significant relief of around Rs. 47 billion by increasing the threshold of salary tax slabs, but this has now been withdrawn and an additional burden of Rs. 33 billion has been imposed. In this article, we will discuss the latest changes in income tax rates and what they mean for the salaried class in Pakistan.
Understanding the New Income Tax Rates
On June 10, the government had announced that the salary will be exempt up to Rs. 1.2 million, giving a breather to the low-income salaried class. However, this relief has been withdrawn and replaced with new income tax rates. The government has now proposed a 2.5% income tax rate on up to rupees hundred thousand monthly income and a 5% income rate for people earning up to rupees 200,000 per month.
It is important to note that these rates are significantly higher than those proposed on June 10, which were 0% for people earning up to Rs. 600,000 per year, 5% for those earning between Rs. 600,000 to Rs. 1.2 million per year, and 10% for those earning between Rs. 1.2 million to Rs. 2.4 million per year.
Impact on the Salaried Class
The new income tax rates will have a significant impact on the salaried class in Pakistan. While those earning up to Rs. 100,000 per month will see a slight decrease in their tax burden, those earning between Rs. 100,000 to Rs. 200,000 per month will see a significant increase in their tax liability. This will put an additional burden on the already struggling middle class in the country.
It is important to note that the government has also increased the minimum taxable income from Rs. 600,000 to Rs. 1.2 million per year. This means that those earning less than Rs. 1.2 million per year will not be required to pay any income tax. This will provide some relief to the low-income salaried class.
Conclusion
The recent changes in income tax rates for the salaried class in Pakistan have caused confusion and concern. While the government had initially announced a significant relief, this has now been withdrawn and replaced with new income tax rates. The new rates will have a significant impact on the middle class, and it remains to be seen how they will cope with the additional burden. It is important for the government to take into consideration the struggles of the salaried class and work towards providing relief in a sustainable manner.
