Govt to explore ways to lessen tax burden on salaried class

ISLAMABAD: Federal Minister for Finance and Revenue, Muhammad Aurangzeb, has pledged to explore ways to mitigate the tax burden on salaried individuals following the introduction of new fiscal measures in the recently unveiled Budget 2024-25.

In an interview with Geo News on Thursday, Aurangzeb emphasised the government’s efforts to “ring-fence the salaried class as much as possible.” He acknowledged the concerns about the increased taxation and shared insights into the government’s rationale.

“I understand the implications,” Aurangzeb remarked in response to queries about additional taxes on Pakistan’s salaried group. “Having worked in this sector for six years, I am well-acquainted with the tax brackets, the super tax, and the Capital Value Tax (CVT). We have exerted significant effort to protect them.”

Aurangzeb pointed out that individuals earning less than Rs600,000 annually remain exempt from income tax. “We also safeguarded the highest tax bracket of 35 per cent. Although we had the option to impose higher taxes on this segment, we refrained to prevent a potential talent exodus,” he explained.

He further stated, “We are currently assessing the extent of relief we can provide within the tax slabs.”

The finance minister highlighted the government’s target to elevate its tax revenue from Rs9.4 trillion to Rs12.9 trillion, necessitating an additional Rs3.5 trillion in revenue. “We plan to generate Rs1.5 trillion through additional revenue measures, including removing exemptions and imposing new taxes,” he said.

Aurangzeb disclosed that the overall impact of the additional tax measures on the salaried class is approximately Rs70 billion out of the anticipated Rs1.5-1.6 trillion.

These comments follow the government’s decision to increase the tax liability for individuals earning over Rs50,000 monthly in the Budget 2024-25.

According to the Finance Bill 2024, those earning Rs6 million annually (Rs500,000 monthly) will see their tax liability rise by Rs22,500. Interestingly, the same increase applies to those earning Rs12 million annually (Rs1 million monthly).

Read next: Gold price declines in Pakistan