The National Assembly has approved a revised Finance Bill 2023 in order to meet the conditions set by the International Monetary Fund (IMF) and secure additional bailout funds. The IMF was dissatisfied with the country’s initial budget, stating that it missed the opportunity to expand the tax base in a fairer way.
The revised budget was passed after Finance Minister Ishaq Dar introduced new taxes and spending cuts. The finance bill includes new measures to generate revenue, such as fresh taxes, which are expected to generate Rs215 billion.
Here are the income tax slabs for 2023 in simpler terms:
- No tax will be applicable if the taxable income is below Rs. 600,000.
- If the taxable income is between Rs. 600,000 and Rs. 1,200,000, a tax rate of 2.5% will be applied to the amount exceeding Rs600,000.
- For salaried individuals with taxable income between Rs. 1,200,000 and Rs. 2,400,000, the tax rate remains unchanged. The tax will be Rs15,000 plus 12.5% of the amount exceeding Rs. 1,200,000.
- If the taxable income is between Rs. 2,400,000 and Rs. 3,600,000, the tax rate will be Rs. 165,000 plus 22.5% of the amount exceeding Rs. 2,400,000.
- For taxable income between Rs. 3,600,000 and Rs. 6,000,000, the tax rate will be Rs435,000 plus 27.5% of the amount exceeding Rs. 3,600,000.
- If the taxable income exceeds Rs. 6,000,000, the tax rate will be Rs. 1,095,000 plus 35% of the amount exceeding Rs. 6,000,000.
These changes have been made to fulfill the IMF’s requirements and generate additional funds for the country’s financial stability.
