Pakistan Budget 2024-25: Key Highlights!

Overview

The Finance Minister of Pakistan, Muhammad Aurangzeb, presented the budget for the fiscal year 2024-25 in the National Assembly. Despite loud protests from the opposition, the budget outlines significant financial plans and changes aimed at economic growth and revenue collection. Here’s a detailed breakdown of the major points.

Economic Goals and Tax Collection

• Growth Target: The budget aims for a modest 3.6% growth in GDP.
• Tax Collection: The target for tax revenue is set at Rs13 trillion, with higher taxes for salaried classes and the removal of many tax exemptions.

Changes in Wages and Taxes

Wage Increases

• Minimum Wage: Proposed increase from Rs32,000 to Rs37,000.
• Government Salaries:
• Grades 1-16: 25% increase.
• Grades 17-22: 20% increase.
• Pensions: 15% increase for retired government employees.

Income Tax Changes

For Non-Salaried Individuals

• Income up to Rs600,000: 0% tax.
• Income between Rs600,000 and Rs1,200,000: 15% of the amount exceeding Rs600,000.
• Income between Rs1,200,000 and Rs1,600,000: Rs90,000 + 20% of the amount exceeding Rs1,200,000.
• Income between Rs1,600,000 and Rs3,200,000: Rs170,000 + 30% of the amount exceeding Rs1,600,000.
• Income between Rs3,200,000 and Rs5,600,000: Rs650,000 + 40% of the amount exceeding Rs3,200,000.
• Income exceeding Rs5,600,000: Rs1,610,000 + 45% of the amount exceeding Rs5,600,000.

For Salaried Individuals

• Income up to Rs600,000: 0% tax.
• Income between Rs600,000 and Rs1,200,000: 5% of the amount exceeding Rs600,000.
• Income between Rs1,200,000 and Rs2,200,000: Rs30,000 + 15% of the amount exceeding Rs1,200,000.
• Income between Rs2,200,000 and Rs3,200,000: Rs180,000 + 25% of the amount exceeding Rs2,200,000.
• Income between Rs3,200,000 and Rs4,100,000: Rs430,000 + 30% of the amount exceeding Rs3,200,000.
• Income exceeding Rs4,100,000: Rs700,000 + 35% of the amount exceeding Rs4,100,000.

For Late Filers

• New Category: Higher tax rates compared to filers but lower than non-filers for those filing late to avoid non-filer penalties.

Property Tax Changes

On Property Purchase

• Filers:
• Up to Rs50 million: 3%
• Rs50 million – Rs100 million: 3.5%
• Above Rs100 million: 4%
• Late Filers:
• Up to Rs50 million: 6%
• Rs50 million – Rs100 million: 7%
• Above Rs100 million: 8%
• Non-Filers:
• Up to Rs50 million: 12%
• Rs50 million – Rs100 million: 16%
• Above Rs100 million: 20%

On Property Sale

• Filers:
• Up to Rs50 million: 3%
• Rs50 million – Rs100 million: 4%
• Above Rs100 million: 5%
• Late Filers:
• Up to Rs50 million: 6%
• Rs50 million – Rs100 million: 7%
• Above Rs100 million: 8%
• Non-Filers: 10% for any value.

Capital Gains Tax on Property

• Filers: Flat 15% rate on gains from disposal of property acquired on or after July 1, 2024.
• Non-Filers: Progressive tax rates based on existing slabs with a minimum of 15%.

Measures Against Non-Filers

• Proposals:
• Blocking of mobile SIMs and severing utility connections.
• Barring travel outside Pakistan, except for specific categories like Hajj and Umrah travelers.
• Penalties for incomplete or false tax returns, and sealing of shops for non-registration.

Withholding Tax Expansion

• Current: Advance tax on sales to certain sectors.
• Proposed: Expand to all sectors.
• Rates for Non-Filers:
• Dealers, distributors, and wholesalers: 2% (up from 0.2%).
• Retailers: 2.5% (up from 1%).

Sales Tax and FED Changes

Mobile Phones

• New Regime: Flat 18% sales tax for phones up to $500.
• For phones above $500:
• Imported completely built: 25% ad valorem.
• Imported semi-built and locally manufactured: 18%.

Smoking and Vaping

• Cigarettes: Sales tax on supply increased from 1% to 2.5%.
• Materials:
• Acetate tow: FED of Rs44,000.
• Nicotine pouches: Rs1200 per kg.
• E-liquids and filter rods: Increased FED.
• Penalties: Sealing of premises for selling illicit cigarettes, and higher price thresholds.

Exemptions and Levies

Exemptions

• Customs Duties:
• Raw materials for hemodialyzers and surfactants for neonatal care.
• Sliver cans and lollipop sticks.
• Incentives: Solar panel manufacturing, farming, and seafood processing equipment.

New Levies

• Sales Tax:
• 10% on imported personal computers, laptops, and stationery.
• 10% on local supplies like vermicelli, sheermal, poultry feed, and newsprint.
• Others:
• FED on sugar supply increased to Rs15/kg.
• Cement FED increased from Rs2/kg to Rs3/kg.
• Various customs duty increases on hybrid and electric vehicles and aerosol containers.

Additional Measures

Health Insurance

• For Journalists: A historic health insurance scheme was announced, covering 5,000 media personnel in the first phase and 10,000 more in the second phase.

Summary

The budget for 2024-25 includes significant changes to wages, taxes, and duties with a focus on economic growth and revenue generation. With new measures against non-filers, expansion of tax collection, and various levies and exemptions, the government aims to streamline tax compliance and boost the economy.

References

• Aaj News: Coverage of the budget presentation.
• Official Budget Documents: Details on tax changes and economic measures.

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