In response to economic challenges, the federal government is looking into providing income tax relief for salaried individuals. Prime Minister Shehbaz Sharif has directed his economic team to explore options for financial assistance.
Sources from the Ministry of Finance reveal that the government is considering a relief package worth Rs 40 billion. This package would benefit individuals earning up to Rs 100,000 per month. The goal is to offer support to those in lower salary brackets who are facing increasing economic pressures.
Before finalizing any decisions, the government plans to consult with the International Monetary Fund (IMF) to ensure that the relief package aligns with existing financial agreements. The proposed relief would not come from the annual budget but would be funded by reallocating development funds.
The Prime Minister’s economic team is reviewing various proposals to effectively implement this relief while maintaining financial stability.
Changes in Income Tax Slabs
Following the approval of the Budget 2024-25, new income tax slabs have been introduced, effective from July 1, 2024. These changes alter the tax obligations for many salaried individuals. The Federal Board of Revenue (FBR) has released a revised tax structure that affects those earning more than Rs 50,000 per month.
Under the new tax regime:
- No Tax: For income up to Rs 50,000 per month.
- 5% Tax: For income between Rs 50,001 and Rs 100,000 per month. The tax in this bracket has increased from Rs 1,250 to Rs 2,500.
- 15% Tax: For income between Rs 100,001 and Rs 183,344 per month, with tax rising from Rs 11,667 to Rs 15,000.
- 25% Tax: For income between Rs 183,345 and Rs 267,667 per month.
- 30% Tax: For income between Rs 267,668 and Rs 341,667 per month, replacing the previous tax of Rs 47,468, which now increases to Rs 53,333.
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Impact on Rs 150,000 Monthly Salary
For those earning Rs 150,000 per month, the new tax structure means they will now fall under the 30% tax slab. Their annual income falls between Rs 1,800,000 and Rs 3,600,000. The tax will be 30% of the amount exceeding Rs 1,600,000.
For example, with a monthly salary of Rs 150,000, the total annual income is Rs 1,800,000. The taxable amount above Rs 1,600,000 is Rs 200,000, resulting in an annual tax of Rs 60,000, or Rs 5,000 per month.