The Pakistani government has proposed revised income tax rates for the upcoming fiscal year, with the new structure expected to take effect from July 1 after parliamentary approval. The changes are part of the latest Finance Bill and aim to provide relief to some taxpayers while maintaining a progressive tax system for higher-income groups.
The final draft of the Finance Bill is scheduled to be presented in the National Assembly. If approved, the new tax framework will affect how much tax is deducted from the Salary of millions of workers across the country.
Under the proposed structure, individuals earning up to Rs600,000 per year will continue to enjoy complete tax exemption. This means no income tax will be charged on their Salary.
For people earning between Rs600,001 and Rs1.2 million annually, the proposed tax rate has been set at 1 percent. This measure is intended to reduce the tax burden on lower-income salaried employees.
The government has also proposed changes for middle-income earners. Taxpayers earning between Rs1.2 million and Rs2.2 million per year will pay a fixed tax of Rs6,000 along with 11 percent on income above Rs1.2 million.
One of the most significant changes applies to those earning between Rs2.2 million and Rs3.2 million annually. The tax rate on additional income in this bracket has been reduced from 23 percent to 20 percent. This adjustment could increase take-home Salary for many professionals.
According to the proposed framework, taxpayers earning between Rs3.2 million and Rs4.1 million will pay a fixed tax of Rs346,000 plus 25 percent on income exceeding Rs3.2 million. Those earning between Rs4.1 million and Rs5.6 million will face a fixed tax of Rs541,000 and 29 percent on additional income.
For individuals earning between Rs5.6 million and Rs7 million annually, the tax liability includes a fixed tax of Rs976,000 along with 32 percent on income above the threshold.
Meanwhile, taxpayers earning more than Rs7 million per year will be required to pay a fixed tax of Rs1.424 million plus 35 percent on income exceeding Rs7 million.
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The proposed changes come at a time when many employees have raised concerns about rising living expenses and increasing deductions from their monthly Salary. While some income groups may benefit from lower tax rates, the overall impact on disposable income will become clearer once the Finance Bill is formally approved and implemented.
