Karachi: Pakistan’s new fiscal year, starting July 1, 2025, will bring meaningful relief to salaried employees under a revised income tax. The annual tax exemption limit remains at Rs 600,000, ensuring that there is no tax for those earning less than Rs 50,000 per month.
For income between Rs 600,001 and Rs 1.2 million, the tax rate has been dramatically reduced to 2.5%, down from 5% last year, saving a monthly taxpayer Rs 24,000 per year on a monthly salary of Rs 100,000.
Those earning Rs 1.2–2.2 million now pay 11% plus a fixed tax of Rs 6,000 (previously 15% plus Rs 30,000), while the Rs 2.2–3.2 million bracket sees a reduction of 23% (from 25%) on income above Rs 2.2 million, with a fixed amount.
Income above Rs 3.2 million remains taxed at 30%–35%, though the fixed tax component has been reduced in the upper slabs.
Exemptions for those earning above Rs 10 million, a one percentage point reduction in the surcharge is also provided, which is aimed at retaining highly skilled professionals.
Overall, the change increases monthly relief from Rs 2,000 for low-income earners to Rs 16,888 for high-income taxpayers, as illustrated by the income tax calculator published today.
The government’s goal is clear to support the salaried class amid rising costs while maintaining consistency with IMF-mandated fiscal targets, such as broadening the tax base and increasing tax compliance, currently only 1.3% of Pakistanis file income tax.
Still, experts warn that this reduction cannot fully offset inflation without structural changes and broader tax enforcement.
