The approved budget for the fiscal year 2023-24, which was passed by the National Assembly on Sunday, differed from the one initially presented by the finance minister on June 9. In an effort to meet the requirements of the International Monetary Fund (IMF) and revive the stalled loan program, the government introduced an additional Rs215 billion in taxes and reduced spending by Rs85 billion. Consequently, the revenue collection target has been raised to Rs9.415 trillion from the original Rs9.2 trillion.
One of the areas affected by these changes is the taxation of the salaried class. Initially, the government had not made any alterations to the tax rates on salaries, which had increased in the previous year. However, the revised budget introduces significant changes in this regard. Here are the revised tax brackets:
- For individuals with an annual income below Rs600,000 (Rs50,000 per month), there will be no tax.
- Those earning between Rs600,000 and Rs1,200,000 per year (Rs50,000 to Rs100,000 per month) will pay a tax of 2.5% on the amount exceeding Rs600,000.
- Individuals with an annual income between Rs1,200,000 and Rs2,400,000 (Rs100,000 to Rs200,000 per month) will pay Rs15,000 plus 12.5% of the amount exceeding Rs1.2 million.
- For those earning between Rs2,400,000 and Rs3,600,000 per year (Rs200,000 to Rs300,000 per month), the tax will be Rs165,000 plus 22.5% of the amount exceeding Rs2.4 million.
- Individuals with an annual income between Rs3,600,000 and Rs6,000,000 (Rs300,000 to Rs500,000 per month) will pay Rs405,000 plus 27.5% of the amount exceeding Rs3.6 million.
- In the next bracket, individuals earning between Rs6,000,000 and Rs12,000,000 per year (Rs500,000 to Rs1,000,000 per month) will be charged Rs1,095,000 plus 35% of the amount exceeding Rs6 million.
- Finally, for those earning more than Rs12,000,000 per year (more than Rs1,000,000 per month), the tax will be Rs1,095,000 plus 35% of the amount exceeding Rs6 million.
These changes reflect the government’s efforts to generate more revenue and meet its financial obligations, including the requirements of the IMF. It is important for individuals falling within these income brackets to be aware of these revised tax rates to ensure proper compliance with the law.
