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Great news! No income tax for those earning up to Rs600,000 in 2024-25

In a significant move to provide financial relief, the federal government has proposed exempting individuals earning up to Rs600,000 annually from paying income tax for the fiscal year 2024-25. Finance Minister Muhammad Aurangzeb announced these changes during the budget session in the National Assembly (NA), emphasizing the necessity for personal tax reforms.

Federal Government Proposes Tax Exemption for Incomes Up to Rs600,000 in FY 2024-25

The new tax target for the upcoming fiscal year has been set at Rs12.97 trillion, marking a substantial 38% year-on-year increase. Despite the increase in overall tax targets, the tax exemption for incomes up to Rs600,000 will be maintained, and the maximum tax slab for the salaried class will not be increased.

New income tax slabs have been introduced to create a more equitable tax structure. Individuals earning between Rs600,000 and Rs1.2 million annually will be taxed at 5% of their income. Those with annual earnings of Rs2.2 million will face a fixed tax of Rs30,000, plus an additional 10% on amounts exceeding Rs1 million.

For incomes between Rs2.2 million and Rs3.2 million, a fixed tax of Rs1.8 lakh plus 25% on income exceeding Rs1 million will be applied. Individuals earning between Rs3.2 million and Rs4.1 million will be taxed Rs4.3 lakh plus 30% on amounts exceeding Rs9 lakh. Earnings above Rs4.1 million will incur a fixed tax of Rs7 lakh plus 35% on the excess amount.

The federal budget for 2024-25, totaling Rs18.877 trillion, is designed to be relief-oriented. It includes a proposed 20-25% ad-hoc salary increase for federal government employees, along with a 15% increase in pensions. Specifically, employees from Grade 1-16 will receive a 25% ad-hoc salary relief, while those from Grade 17-22 will receive a 20% increase. These measures aim to boost the purchasing power of government employees.

Additionally, the minimum wage will be raised from Rs32,000 to Rs37,000 per month. These proposed changes underscore the government’s efforts to provide financial relief and support to its citizens despite ongoing economic challenges.

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Zainab Shafiq

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