Federal Budget Increases Tax Burden on Salaried Class

Federal Budget Increases Tax Burden on Salaried Class

The recent federal budget has introduced significant tax increases for salaried individuals, resulting in a considerable financial burden just before the Eid-ul-Adha celebrations. The finance minister’s proposal includes the introduction of five new tax brackets, which effectively double the existing tax rates. Below are the key details of the new tax measures:

New Tax Brackets for Salaried Class

  • Income Between 600,000 to 1,200,000 Rupees
    • The income tax rate has been increased to 5%.
    • This change affects a large number of middle-income earners.
  • Annual Salary of 2,200,000 Rupees
    • A fixed tax of 30,000 rupees has been imposed.
    • Additionally, a 15% income tax will be levied on the next 1,000,000 rupees earned.
    • This results in a substantial increase in the tax liability for those in this bracket.
  • Annual Salary Between 2,200,000 and 3,200,000 Rupees
    • Individuals in this bracket will face a fixed tax of 180,000 rupees.
    • Additionally, a 25% income tax will be applied to the next 1,000,000 rupees.
    • This significantly raises the overall tax burden on higher middle-income earners.
  • Annual Salary Between 3,200,000 and 4,100,000 Rupees
    • A fixed tax of 430,000 rupees has been imposed on individuals in this income range.
    • An additional 30% income tax will be applied to the next 900,000 rupees earned.
    • This results in a notable increase in tax obligations for those in this bracket.
  • Annual Salary Exceeding 4,100,000 Rupees
    • A fixed tax of 700,000 rupees will be imposed on individuals earning more than 4,100,000 rupees annually.
    • Furthermore, a 35% income tax will be applied to any amount exceeding this threshold.
    • This change places a substantial tax burden on the highest income earners.

Impact on Salaried Workers

These new tax measures have sparked significant concern among salaried workers. Many individuals are now facing considerable financial pressure just before the festive occasion of Eid-ul-Adha. The increased tax rates and fixed taxes will reduce the disposable income of many salaried individuals. This reduction in disposable income may affect the ability of workers to meet their financial obligations and participate fully in the Eid-ul-Adha celebrations.

The increased tax burden on the salaried class could have broader economic implications. Reduced disposable income may lead to decreased consumer spending, potentially impacting various sectors of the economy. The introduction of these new tax measures highlights the government’s approach to addressing fiscal challenges. However, the timing and extent of these increases have raised concerns about their impact on the salaried class, particularly as they prepare for Eid-ul-Adha.

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