As the new fiscal year begins, understanding the FBR income tax slabs for 2024-25 in Pakistan becomes crucial for salaried individuals, business owners, and freelancers alike.
These slabs determine how much income tax you’ll owe to the Federal Board of Revenue (FBR) and can significantly impact your financial planning.
This guide will break down the latest income tax slabs, explain the changes introduced for the 2024-25 fiscal year, and help you calculate your tax liability accurately.
Table of Contents
What are Income Tax Slabs?
Income tax slabs are structured tiers that dictate how much tax a person must pay based on their income. The higher your income, the higher the tax rate that applies to you.
In Pakistan, these slabs are defined by the FBR and are revised annually to reflect changes in the economy and government policy.
The purpose of income tax slabs is to ensure a progressive tax system where individuals with higher incomes contribute more to the nation’s revenue.
Taxpayers in Pakistan fall into different categories, such as salaried individuals, non-salaried individuals, and businesses.
Each category has its own set of tax slabs, which means that the amount of tax you owe can vary significantly depending on your source of income.
Key Changes in Income Tax Slabs for 2024-25
The 2024-25 fiscal year has brought several notable changes to the income tax slabs in Pakistan. The government, aiming to balance revenue generation with economic growth, has introduced adjustments to the tax rates and income thresholds.
One of the most significant changes is the increase in the income threshold for the lowest tax bracket, providing relief to low-income earners.
Additionally, there have been adjustments in the tax rates for higher-income brackets to ensure that the tax burden is distributed more equitably. Understanding these changes is essential for accurate tax planning and compliance.
Also Read: How to File Income Tax Returns Online in Pakistan
FBR Income Tax Slabs for Salaried Individuals (2024-25)
Salaried individuals make up a substantial portion of Pakistan’s tax base. The income tax slabs for salaried persons have been structured to reflect the government’s intent to provide relief to low and middle-income earners while ensuring that higher earners contribute their fair share.
Here’s a breakdown of the FBR income tax slabs for salaried individuals for the fiscal year 2024-25:
- Income up to PKR 600,000: No tax
- Income from PKR 600,001 to PKR 1,200,000: 5% of the amount exceeding PKR 600,000
- Income from PKR 1,200,001 to PKR 2,400,000: PKR 30,000 + 10% of the amount exceeding PKR 1,200,000
- Income from PKR 2,400,001 to PKR 4,800,000: PKR 150,000 + 15% of the amount exceeding PKR 2,400,000
- Income from PKR 4,800,001 and above: PKR 510,000 + 20% of the amount exceeding PKR 4,800,000
For instance, if you earn PKR 1,500,000 annually, your income tax would be calculated as follows:
- PKR 30,000 (fixed tax on the first PKR 1,200,000) + 10% of PKR 300,000 (the amount exceeding PKR 1,200,000) = PKR 60,000.
FBR Income Tax Slabs for Business and Non-Salaried Individuals (2024-25)
Non-salaried individuals, including business owners and freelancers, are subject to different tax slabs compared to salaried persons.
The FBR has designed these slabs to account for the variability and risk associated with non-salaried income.
The FBR income tax slabs for non-salaried individuals for the fiscal year 2024-25 are as follows:
- Income up to PKR 400,000: No tax
- Income from PKR 400,001 to PKR 1,200,000: 5% of the amount exceeding PKR 400,000
- Income from PKR 1,200,001 to PKR 2,400,000: PKR 40,000 + 15% of the amount exceeding PKR 1,200,000
- Income from PKR 2,400,001 to PKR 4,800,000: PKR 220,000 + 20% of the amount exceeding PKR 2,400,000
- Income from PKR 4,800,001 and above: PKR 700,000 + 25% of the amount exceeding PKR 4,800,000
For example, a freelancer earning PKR 2,000,000 annually would calculate their tax as follows:
- PKR 40,000 (fixed tax on the first PKR 1,200,000) + 15% of PKR 800,000 (the amount exceeding PKR 1,200,000) = PKR 160,000.
Also Read: How to File Income Tax Returns Online in Pakistan
How to Calculate Your Income Tax Using the 2024-25 Slabs
Calculating your income tax based on the 2024-25 slabs involves a few simple steps. Here’s how you can do it:
- Determine Your Total Annual Income: This includes your salary, business income, rental income, and any other taxable income.
- Identify Your Tax Slab: Based on your total income, identify which tax slab you fall into according to the FBR’s 2024-25 slabs.
- Calculate the Tax for Your Slab: Use the percentage provided in your tax slab to calculate the tax on the portion of your income that exceeds the lower limit of the slab.
- Add Fixed Taxes (if applicable): For higher slabs, add the fixed amount specified in the slab structure.
- Subtract Any Deductions: If you qualify for any tax credits or deductions, subtract them from your calculated tax.
For added convenience, you can use an online income tax return calculator that can help you accurately determine your tax liability.
Impact of the 2024-25 Income Tax Slabs on Different Income Groups
The revised income tax slabs for 2024-25 are designed to have a varied impact on different income groups. Here’s how these changes affect taxpayers across different income brackets:
Low-Income Earners:
Those earning up to PKR 600,000 annually will benefit the most, as they are exempt from paying any income tax. This relief is intended to support low-income households and encourage compliance.
Middle-Income Earners:
Individuals in the middle-income brackets will experience a moderate tax burden, with rates designed to be fair yet affordable. The slight increase in the income threshold for the 5% tax bracket also provides some relief.
High-Income Earners:
High earners will see a more significant tax burden, especially those earning above PKR 4.8 million annually. The increased tax rate reflects the government’s focus on redistributing wealth and funding public services.
Overall, the 2024-25 tax slabs aim to balance revenue collection with economic fairness, ensuring that taxpayers contribute according to their financial capacity.
Tax Credits and Deductions for 2024-25
In addition to understanding the income tax slabs, taxpayers should also be aware of the various tax credits and deductions available for the fiscal year 2024-25. These can help reduce your overall tax liability and maximize your savings.
- Investment in Pension Funds: Contributions to approved pension funds can qualify for tax credits, reducing your taxable income.
- Charitable Donations: Donations to approved charities and nonprofit organizations can be deducted from your taxable income, subject to specific limits.
- Education Expenses: Tuition fees for dependents may qualify for deductions, providing relief for families with children in school or university.
- Health Insurance Premiums: Premiums paid for health insurance policies may be eligible for tax deductions, offering financial relief for individuals and families.
To take full advantage of these credits and deductions, ensure that you keep accurate records and receipts of all eligible expenses.
Frequently Asked Questions (FAQs) About FBR Income Tax Slabs
Q: Who needs to file income tax returns in Pakistan?
Anyone earning above the minimum taxable income threshold set by the FBR is required to file income tax returns.
Q: What is the deadline for filing income tax returns for 2024-25?
The deadline is typically September 30th, but it’s advisable to check with the FBR for any extensions.
Q: How can I verify my income tax payment?
After filing your returns and making the payment, you can verify it through the FBR’s online portal or by obtaining a tax payment certificate from your bank.
Q: Are there any penalties for late filing?
Yes, late filers may be subject to penalties, including fines and interest on the unpaid tax amount.
Conclusion
Understanding the FBR income tax slabs for 2024-25 is essential for every taxpayer in Pakistan.
Whether you’re a salaried individual, a business owner, or a freelancer, staying informed about these tax rates will help you plan your finances better and ensure compliance with the law. The
Struggling with tax returns or Need any help? Let our experts handle the paperwork, ensuring a smooth and accurate filing process for you. Get in touch Legal Point or call at 03337703712 today for hassle-free tax return services