The onset of the new fiscal year has brought significant alterations in taxation for salaried individuals, introduced through the Finance Bill 2024, effective from July 1.
These revisions, designed to enhance revenue generation, encompass a range of tax rates and fixed taxes aligned with different income brackets.
Under the updated tax framework:
- Individuals earning up to Rs50,000 per month or Rs600,000 annually are exempt from income tax.
- Monthly incomes up to Rs100,000 now incur a 5% income tax rate, applicable to annual earnings between Rs600,000 and Rs1.2 million. This bracket will see their monthly tax rise to Rs2,500 from the previous Rs1,250.
- Those earning between Rs1.2 million and Rs2.2 million annually face a 15% income tax rate alongside an annual fixed tax of Rs30,000.
- Individuals earning Rs183,344 monthly will pay a 15% tax, equating to a monthly tax of Rs15,000, up from Rs11,667.
- Annual incomes between Rs2.2 million and Rs3.2 million are subject to a 25% income tax rate, coupled with an additional fixed tax of Rs180,000 annually.
- Monthly earners of Rs267,667 will pay 25%, amounting to Rs36,083 monthly, up from Rs28,770.
- For incomes ranging from Rs3.2 million to Rs4.1 million annually, a 30% income tax rate applies with a fixed tax of Rs430,000 annually.
- Monthly earners of Rs341,667 will now pay a 30% tax of Rs58,333, up from Rs47,408.
- Salaries exceeding Rs4.1 million annually incur a maximum 35% tax rate, supplemented by a fixed tax of Rs700,000 annually.
- Individuals and Associations of Persons (AOPs) with income surpassing Rs10 million face a 10% surcharge.
These changes reflect the government’s effort to streamline tax policies and ensure equitable taxation across income groups, aiming to boost revenue while maintaining fiscal stability.
These newly introduced tax measures are expected to significantly impact the disposable income of salaried individuals, potentially imposing higher tax liabilities on those with higher earnings.
The government’s objective behind these adjusted tax rates is to augment revenue collection, forming part of a broader fiscal strategy outlined in the Finance Bill 2024.
Effective from Monday, the Finance Bill 2024 initiates changes that include revised tax rates on domestically manufactured vehicles, among other adjustments.
This reform signifies a transition from fixed taxation to a value-based system, as articulated in the Finance Bill. Under this updated framework, taxes on vehicles no longer follow a predetermined rate but instead vary in accordance with the vehicle’s assessed value.
