What Is The Income Tax Rate In Pakistan For 2024?

 The Tax Calculator Pakistan for the year 2024 is determined by the Federal Board of Revenue (FBR), based on the Income Tax Ordinance, 2001. The tax rates vary depending on the taxpayer’s status, which includes salaried individuals, non-salaried individuals, and companies. The government’s aim with its tax policy is to create a progressive system, meaning that higher income levels are taxed at higher rates, ensuring a fair distribution of the tax burden.

Income Tax Rates for Salaried Individuals

For salaried individuals in Pakistan, the tax rates for the fiscal year 2023-2024 are progressive and apply as follows:

Income up to PKR 600,000: 0%

Individuals with an annual income of PKR 600,000 or less are exempt from paying income tax. This exception is expected to help to bring down pay for workers.

Income between PKR 600,001 and PKR 1,200,000: 2.5%

For income in this range, the applicable tax rate is 2.5% of the amount exceeding PKR 600,000.

Income between PKR 1,200,001 and PKR 2,400,000: 12.5%

For income between PKR 1.2 million and PKR 2.4 million, the tax rate is 12.5%.

Pay between PKR 2,400,001 and PKR 3,600,000: 20%

This bracket is taxed at 20%, reflecting the government’s attempt to tax higher-income earners at a steeper rate.

Income between PKR 3,600,001 and PKR 6,000,000: 25%

For individuals earning between PKR 3.6 million and PKR 6 million, the tax rate is set at 25%.

Pay between PKR 6,000,001 and PKR 12,000,000: 32.5%

Those with annual income in this range face a higher tax burden, with a rate of 32.5%.

Income above PKR 12,000,000: 35%

The highest tax bracket is for individuals earning over PKR 12 million annually, with a tax rate of 35%.

Income Tax Rates for Non-Salaried Individuals

Non-salaried individuals, such as business owners or freelancers, also fall under a progressive tax regime, but with slightly different rates than salaried individuals. For the fiscal year 2024, the tax rates for non-salaried individuals are as follows:

Income up to PKR 400,000: 0%

Non-salaried individuals with income below this threshold are not required to pay income tax.

Income between PKR 400,001 and PKR 800,000: 5%

Income in this range is taxed at 5%.

Income between PKR 800,001 and PKR 1,200,000: 10%

The tax rate for income in this bracket is 10%.

Income between PKR 1,200,001 and PKR 2,400,000: 15%

A 15% tax rate applies to individuals earning between PKR 1.2 million and PKR 2.4 million.

Pay between PKR 2,400,001 and PKR 3,600,000: 20%

Income in this range is taxed at 20%.

Income between PKR 3,600,001 and PKR 6,000,000: 25%

The tax rate for this income level is 25%.

Income between PKR 6,000,001 and PKR 12,000,000: 30%

Individuals earning up to PKR 12 million annually are taxed at 30%.

Income above PKR 12,000,000: 35%

Non-salaried individuals earning over PKR 12 million face the same highest tax rate as salaried individuals at 35%.

Corporate Tax Rates

For corporations, the tax rate for the fiscal year 2024 is generally set at 29%. However, banks and certain other high-earning entities, such as insurance companies, may face a higher tax rate of up to 39%. The Tax Calculator Pakistan applies to profits, and companies are also subject to other taxes such as withholding tax and sales tax.

Withholding Taxes

In addition to the direct income tax rates, Pakistan has an extensive system of withholding taxes, where tax is deducted at the source for various transactions. For example, withholding taxes are applied on salaries, dividends, property transactions, and imports. These taxes are generally adjustable against the taxpayer’s annual tax liability.

Conclusion

The income tax rates in Pakistan for 2024 reflect the government’s goal of implementing a progressive tax system that taxes higher earners at steeper rates while providing relief to those in lower income brackets. Hamza & Hamza Law Associates are subject to different tax regimes, with the highest tax rate being 35% for individuals earning above PKR 12 million annually. The corporate tax rate is set at 29%, though specific sectors like banking face higher rates.

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