Finance Minister Muhammad Aurangzeb presented the 2024-25 Budget in Parliament on Wednesday amid noisy debate with Opposition parties shouting slogans and banging on tables in protest.
Pakistan’s budget for next year targets a modest GDP growth rate of 3.6 percent and sets an ambitious tax revenue target of 13 trillion rupees by raising taxes on salaried workers and eliminating tax exemptions for everyone else.
Higher minimum wages, higher taxes
In his speech, the Finance Minister said that the minimum wage 37,000 rupees Starting from Rs 32,000.
He also said that the salaries of civil servants from grade 1 to grade 16 are 25% increase and 20 pieces Expanding work opportunities for students in grades 17-22 and increasing pensions for retired employees 15 pieces.
Meanwhile, among the notable changes in taxes/duties introduced by the government in the Budget 2024-25, an interesting one is the change in tax rates for non-salaried individuals.
There is No income tax For annual income up to Rs 6 lakh.
If this standard is exceeded, Non-salary earners There are five tax brackets with progressive tax rates: 15-45 pcs.
- If your taxable income does not exceed Rs 600,000: 0%
- Taxable income 600,000 to 1.2 million rupees: 15% of the amount exceeding Rs. 600,000
- Taxable income 1,200,000-1,600,000 rupees: Rs90,000 + 20% of the amount exceeding Rs1,200,000
- Taxable income 1,600,000 to 3,200,000 rupees: Rs170,000 + 30% of the amount exceeding Rs1,600,000
- Taxable income 3,200,000 to 5,600,000 rupees: Rs650,000+40% of the amount exceeding Rs3,200,000
- Taxable income 5,600,000 rupees: Rs1,610,000 + 45% of the amount exceeding Rs5,600,000
for Salaried workerThere are five tax brackets for those earning more than 600,000 rupees per year. 5-35 pieces.
- If your taxable income does not exceed Rs 600,000: 0%
- Taxable income 600,000 to 1.2 million rupees: 5% of the amount exceeding Rs. 600,000
- Taxable income 1,200,000 to 2,200,000 rupees: Rs30,000 + 15% of the amount exceeding Rs1,200,000
- Taxable income 2,200,000 to 3,200,000 rupees: Rs180,000 + 25% of the amount exceeding Rs2,200,000
- Taxable income 3,200,000-4,100,000 rupees: Rs430,000+30% of the amount exceeding Rs3,200,000
- Taxable income 4,100,000 rupees: Rs700,000 + 35% of the amount exceeding Rs4,100,000
Separately, Higher tax rates for late filers.
Currently, high tax rates are imposed on companies that fail to file, making it more costly to do business and forcing them to do so, according to documents released by the government.
However, now new tax rates have been introduced for new categories. Late submitters.
To avoid high tax rates on non-filers, the government defined a late filer as someone who becomes a filer after the tax return deadline solely for certain transactions.
A new tax rate will be introduced for such late filers, Higher than tax filers, but lower than non-filers.
overview Real estate taxThe government has also prescribed progressive tax rates on the purchase and sale of real estate for three categories of individuals – filers, late filers and non-filers.
upper Buying real estateThe tax rates are as follows:
For the Declarant:
- Three Property value up to Rs 50 million
- 3.5 pieces Property value between Rs 50 million and Rs 100 million
- Four For properties worth Rs 100 crore and above
If you file late:
- 6 Property value up to Rs 50 million
- Seven Property value between Rs 50 million and Rs 100 million
- 8 pieces For properties worth Rs 100 crore and above
Those who do not declare:
- 12 pieces Property value up to Rs 50 million
- 16 pieces Property value between Rs 50 million and Rs 100 million
- 20 pieces For properties worth Rs 100 crore and above
upper Selling real estateThe budget proposed progressive withholding tax rates for three categories.
For the Declarant:
- Three Property value up to Rs 50 million
- Four Property value between Rs 50 million and Rs 100 million
- 5 pieces For properties worth Rs 100 crore and above
Those who do not declare: The tax rate is 10% regardless of the value of the property.
If you file late:
- 6 Property value up to Rs 50 million
- Seven Property value between Rs 50 million and Rs 100 million
- 8 pieces For properties worth Rs 100 crore and above
In the budget proposal, The tax rate for gains from the disposal of real estate acquired by a taxpayer on or after July 1, 2024 is a flat 15% Regardless of the holding period.
For non-filers, the government proposed a progressive tax rate based on the graduated tax rates prescribed in Part 1 of the First Schedule to the Income Tax Act, with a minimum rate of 15%.
Crackdown on unreported income
The government has also proposed a series of measures to crack down on non-filers and force them to file tax returns, besides blocking mobile phone SIM cards and cutting utility connections.
In the budget proposal, Such individuals will be barred from leaving Pakistan. However, this does not include Hajj and Umrah travellers, minors, students and overseas Pakistanis.
Penalties have been proposed for companies that fail to fully disclose relevant details, submit incomplete information in tax returns or fail to file returns when they cease operations.
moreover, Punishment for store closure The scheme has been proposed for traders and shopkeepers who have failed to register.
The government will also take measures to prevent shopkeepers and traders from failing to register. An offence which, on conviction, is punishable by imprisonment for a term which may extend to six months or by a fine, or by both..
Expanding the scope of withholding tax
The government also said that currently advance tax is collected on sales to dealers, distributors, wholesalers and retailers in certain niche sectors.
Now, such taxes are All Sectors Expand the economy, Across the supply chain It comprises of all distributors, wholesalers, dealers and retailers with the aim of recording traders.
In addition, the tax rate for dealers, distributors and wholesalers who have not filed tax returns is 0.2% to 2% and The percentage of retail non-filers ranges from 1% to 2.5% The purpose is to record traders and prevent non-submission.
Smoking and e-cigarette ban
The budget also proposes several measures that could discourage smoking and e-cigarette use by increasing the associated costs of tobacco and e-cigarettes.
The reduced tax rate on the supply of tobacco by a dealer is: Increased to 2.5% From 1 piece
Also, Federal Excise Duty (FED) Rs. 44,000 About acetate tow, a material often used in making cigarette filters.
Other similar restrictions include:
- FED on Nicotine Pouches 1200 rupees per kilogram
- Enhancement The Federal Education Commission on E-Liquid, the liquid used in e-cigarettes.
- FED for filter rods (the body of the cigarette) starts at Rs 1,500/kg 80,000 rupees/kg
- power Seal the business office Retailers selling illegal tobacco
- Price benchmark for locally manufactured cigarettes to start at Rs 9,000 12,500 rupees
Health insurance for media professionals
The finance minister also announced a health insurance scheme for journalists and media workers.
Information Minister Ataullah Talal hailed the move as a “historic step” and said health insurance would be provided. 5,000 people in the first phase.
He further added, 10,000 people Health insurance will be provided in the second phase.
Other notable exemptions
Other notable customs exemptions and tax reductions proposed in the Budget include:
- Exemption from customs duties on liquid and powder raw materials used in hemodialysis machines (dialysis equipment).
- Customs exemption for bovine lipid extract surfactants indicated for emergency treatment of neonatal respiratory distress syndrome
- Removal of Regulatory Duty (RD) on import of silver tins and lollipop sticks
- Incentives for manufacturing solar panels and related equipment
- Expansion of exemptions for import of machinery and equipment for aquaculture and processing of fishery products
Notable taxation
Conversely, there were some developments that could hurt ordinary people’s wallets.
- Withdrawal of RD exemption on imports Crushed nuts and margarine Food and confectionery imports
- Withdrawal of tariff concessions Import of fresh and dried fruits
- Withdrawal of tariff reductions Importing hybrid cars
- Reduction of tariff reductions Importing electric vehicles worth more than $50,000
- Increase in tariffs on imports of containers for aerosol products (hairspray, insect repellent spray, etc.)
- Increase in the reduced consumption tax rate for supplies at the point of sale from 15% to 18% Leather and textile retailer
- FED of Rs 15/kg Sugar supply To the manufacturer
- FED on cement to be increased from Rs 2/kg to Rs 3/kg
