The Ministry of Finance has announced a significant salary increase for government and semi-government employees for the new fiscal year. The notification reveals a salary boost of 20% to 25% across various grades. The change is effective starting July 1, 2024.
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Salary Increase Details
For government and semi-government institutions:
- Employees in grades 1 through 16 will see a 25% increase in their salaries.
- Employees in grades 17 through 22 will receive a 20% increase.
This move aims to address inflation and improve the financial well-being of employees within these institutions.
New Tax Regulations for 2024-25
In line with these changes, the Federal Board of Revenue (FBR) has also updated the tax card for salaried individuals, effective from the 2024-25 financial year. Here is how the updated tax system will be implemented:
- Income Up to 50,000 PKR per Month: No income tax will be levied.
- Annual Income up to 600,000 PKR: Exempt from income tax.
- Annual Income between 600,000 PKR and 1,200,000 PKR: A 5% tax is applicable. For example, those earning 1,000,000 PKR annually will pay 20,000 PKR in tax.
- Annual Income between 1,200,000 PKR and 2,200,000 PKR: A fixed tax of 30,000 PKR plus an additional 15% tax on income exceeding 1,200,000 PKR.
- Annual Income between 2,200,000 PKR and 3,200,000 PKR: A fixed tax of 180,000 PKR plus 25% on the income exceeding 2,200,000 PKR.
- Annual Income above 3,200,000 PKR: A fixed tax of 430,000 PKR plus 30% on the income exceeding 3,200,000 PKR.
For those with an annual salary of 5,000,000 PKR, the total tax will be 1,050,000 PKR, including a fixed tax of 900,000 PKR and an additional 35% tax on the remaining income.
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Employers are responsible for deducting the applicable taxes from employees’ salaries before disbursing payments. This updated tax card aims to simplify the tax collection process and offer relief to lower-income earners.
