Those individuals who have a salaried source of income and want to learn about which is the correct figure to enter in the Online tax calculator in order to arrive at tax payable or tax liability arising on your income, this article would discussed well about the figure is being taxed, also the tax slab rates for salaried individuals and how to compute tax on salary income.
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Tax on salary source of income is levied in u/s 149 of tax ordinance 2001 and subject to tax as per guidelines defined as per section of tax ordinance 2001, those individuals who are resident Pakistani earning from salary source of income should understand first division in the salary income.
A salary income depends upon a couple of factors which use to derive the final figure that an individual take to home including the following basic salary, Living allowance, Fuel allowance, Medical allowance, and other allowances provided to you, as per the nature of your job, But the Point is which amount is subject to Tax. Or on which final figure does an employee charge for income tax with the name of Withholding Tax on their salary income.
The applicable income tax section defines the gross salary figure which is used to calculate tax on salary, this amount doesn’t include any other additional bonuses or compensations you may receive as a reward upon your outstanding performance by your employer.
IMPORTANT! For the tax year 2023 | The government has recently implemented changes to the income tax structure, streamlining the system by reducing the number of tax slabs from seven to six. One notable alteration involves the elimination of the slab previously covering annual incomes between Rs 6 million and Rs 12 million.
Individuals earning between Rs500,000 and Rs1,000,000 per month were previously subject to an income tax formula of Rs1,005,000 plus 32.5% of the income exceeding Rs6,000,000 annually. However, a revision has been made, resulting in a higher % tax rate of 35% being applied to all income exceeding Rs6,000,000 per year. In addition to this, they will also be required to pay a fixed amount of Rs1,095,000. Following are the latest tax slab rates in Pakistan for the fiscal year 2021-22 onwards.
Income Tax Slab Rates Fiscal year 2021-22 Till 2023-2024
Salary Tax Slabs For the Tax Year 2023-24
Additionally, the government has issued a revised list of income tax slabs for salaried individuals. Before the amendments, there were seven slabs, which have now been reduced to six.
| Taxable Income | Tax Liability |
|---|---|
| Where the taxable income doesn’t exceed PKR 600,000/- | PKR 0/- |
| Where the taxable income exceeds PKR 600,000/- but doesn’t exceed PKR 1,200,000/- | 2.5% of the amount exceeding PKR 600,000/- |
| Where the taxable income exceeds PKR 1,200,000/- but doesn’t exceed PKR 2,400,000/- | PKR 15,000 + 12.5% of the amount exceeding PKR 1,200,000/- |
| Where the taxable income exceeds PKR 2,400,000/- but doesn’t exceed PKR 3,600,000/- | PKR 165,000 + 22.5% of the amount exceeding PKR 1,200,000/- |
| Where the taxable income exceeds PKR 3,600,000/- but doesn’t exceed PKR 6,000,000/- | PKR 435,000 + 27.5% of the amount exceeding PKR 3,600,000/- |
| Where the taxable income exceeds PKR 6,000,000/ | PKR 1095,000 + 35% of the amount exceeding PKR 6,000,000/- |
Salary Tax Slabs For the Tax Year 2022-23
Additionally, the government has issued a revised list of income tax slabs for salaried individuals. Before the amendments, there were twelve slabs, which have now been reduced to seven.
| Taxable Income | Tax Liability |
|---|---|
| Where the taxable income doesn’t exceed PKR 600,000/- | PKR 0/- |
| Where the taxable income exceeds PKR 600,000/- but doesn’t exceed PKR 1,200,000/- | 2.5% of the amount exceeding PKR 600,000/- |
| Where the taxable income exceeds PKR 1,200,000/- but doesn’t exceed PKR 2,400,000/- | PKR 15,000 + 12.5% of the amount exceeding PKR 1,200,000/- |
| Where the taxable income exceeds PKR 2,400,000/- but doesn’t exceed PKR 3,600,000/- | PKR 165,000 + 20% of the amount exceeding PKR 1,200,000/- |
| Where the taxable income exceeds PKR 3,600,000/- but doesn’t exceed PKR 6,000,000/- | PKR 405,000 + 25% of the amount exceeding PKR 3,600,000/- |
| Where the taxable income exceeds PKR 6,000,000/- but doesn’t exceed PKR 12,000,000/- | PKR 1005,000 + 32.5% of the amount exceeding PKR 6,000,000/- |
| Where the taxable income exceeds PKR 12,000,000/- | PKR 2,955,000 + 35% of the amount exceeding PKR 12,000,000/- |
Salary Tax Slabs For the Tax Year 2021-22
Government didn’t made any changes from previous tax year, that’s why these are same coming from tax year 2020-21.
| Taxable Income | Tax Liability |
|---|---|
| Where the taxable income doesn’t exceed PKR 600,000/- | PKR 0/- |
| Where the taxable income exceeds PKR 600,000/- but doesn’t exceed PKR 1,200,000/- | 5% of the amount exceeding PKR 600,000/- |
| Where the taxable income exceeds PKR 1,200,000/- but doesn’t exceed PKR 1,800,000/- | PKR 30,000 + 10% of the amount exceeding PKR 1,200,000/- |
| Where the taxable income exceeds PKR 1,800,000/- but doesn’t exceed PKR 2,500,000/- | PKR 90,000 + 15% of the amount exceeding PKR 1,800,000/- |
| Where the taxable income exceeds PKR 2,500,000/- but doesn’t exceed PKR 3,500,000/- | PKR 195,000 + 17.5% of the amount exceeding PKR 2,500,000/- |
| Where the taxable income exceeds PKR 3,500,000/- but doesn’t exceed PKR 5,000,000/- | PKR 370,000 + 20% of the amount exceeding PKR 3,500,000/- |
| Where the taxable income exceeds PKR 5,000,000/- but doesn’t exceed PKR 8,000,000/- | PKR 670,000 + 22.5% of the amount exceeding PKR 5,000,000/- |
| Where the taxable income exceeds PKR 8,000,000/- but doesn’t exceed PKR 12,000,000/- | PKR 1,345,000 + 25% of the amount exceeding PKR 8,000,000/- |
| Where the taxable income exceeds PKR 12,000,000/- but doesn’t exceed PKR 30,000,000/- | PKR 2,345,000 + 27.5% of the amount exceeding PKR 12,000,000/- |
| Where the taxable income exceeds PKR 30,000,000/- but doesn’t exceed PKR 50,000,000/- | PKR 7,295,000 + 30% of the amount exceeding PKR 30,000,000/- |
| Where the taxable income exceeds PKR 50,000,000/- but doesn’t exceed PKR 75,000,000/- | PKR 13,295,000 + 32.5% of the amount exceeding PKR 50,000,000/- |
| Where the taxable income exceeds PKR 75,000,000/- | PKR 21,420,000 + 35% of the amount exceeding PKR 75,000,000/- |
Being a salaried individual you should also learn about the available tax deductions and tax credits provided by the tax ordinance 2001 u/s 60, the following article describes well about the opportunity in terms of deductions in the Workers Welfare Fund, Zakkat, Educational Expenses, Profit on debt and Medical allowances.
Deductible Allowances For Salaried Individuals
How an salaried individual can get tax credits and deductions from their tax liability. A number of tax deductions are available on certain events.
People in developed Societies pay taxes. You should also read the Benefits for Filler section articles. Which describes well the benefits of being a responsible resident of Pakistan.
