Pakistan’s tax on salaried class 9.4 times higher than India’s: PBC

ISLAMABAD: The Pakistan Business Council (PBC), the country’s leading private sector advocacy platform, revealed on Thursday that salaried individuals in Pakistan are paying up to 9.4 times more in income tax than their counterparts in neighbouring India.

This stark difference was highlighted through a comparison of income tax slabs between the two countries.

In a social media post on platform X, the PBC emphasised that despite similar living costs, income tax on salaried employees in Pakistan is significantly higher than in India.

This revelation follows the Pakistani government’s recent decision to increase taxes on the salaried class as part of the Budget 2024-25, announced on June 12.

The Finance Bill 2024 has introduced higher tax liabilities for individuals earning over Rs50,000 a month, aiming to raise an additional Rs70 billion in revenue. Although the tax exemption threshold remains at Rs50,000, those earning more are facing increased tax rates.

For instance, someone earning Rs100,000 monthly will now pay Rs2,500 in taxes, up from Rs1,250—a 100 per cent increase.

Additionally, a 10 per cent surcharge has been introduced for individuals whose annual income exceeds Rs10 million, compounding the tax burden for high earners.

In contrast, the Indian government recently reduced income tax rates to stimulate consumption. Under the new system, annual income between 300,000 and 700,000 Indian Rupees (INR) will be taxed at 5 per cent, compared to the previous rate for income between 300,000 and 600,000 INR.

The PBC’s data highlighted the significant disparity in tax liabilities. For example, in Pakistan, individuals earning up to Rs1.2 million annually face a tax of Rs30,000, whereas in India, the equivalent tax is only Rs3,018—a difference of Rs26,982 or 8.9 times.

Similarly, those earning Rs1.8 million annually will pay Rs120,000 in Pakistan compared to Rs12,027 in India, reflecting a nine-fold difference. For individuals with an annual income of Rs2.4 million, the tax in Pakistan is Rs230,000, while in India it is just Rs22,072, resulting in a disparity of Rs207,928 or 9.4 times.

The PBC has criticised the tax system in Pakistan, stating that it is inequitable and fails to provide adequate value for the taxes paid. The increase in taxation has already sparked protests among the salaried class in Pakistan.

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