Revised Income Tax Rates for Salaried Individuals in Budget 2023-24

The amended Finance Bill 2023 has introduced new income tax slabs for the salaried class, with changes to the higher rate of income tax applicable from July 1, 2023. The revised slabs were revealed by the Federal Board of Revenue (FBR) and will impact individuals based on their annual taxable income.

For individuals whose annual taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,600,000, the rate of tax will be Rs. 165,000 plus 22.5% of the amount exceeding Rs. 2,400,000. This means that they will be required to pay a higher tax amount based on their income.

The income tax rates for salaried individuals with taxable income exceeding Rs. 1,200,000 but not exceeding Rs. 2,400,000 will remain unchanged. The rate of tax for this slab will continue to be Rs. 15,000 plus 12.5% of the amount exceeding Rs. 1,200,000.

For taxable incomes exceeding Rs. 3,600,000 but not exceeding Rs. 6,000,000, the rate of tax will be Rs. 405,000 plus 27.5% of the amount exceeding Rs. 3,600,000. This higher rate reflects an increase in the tax liability for individuals falling within this income bracket.

Individuals with taxable income exceeding Rs. 6,000,000 will face a rate of tax of Rs. 1,095,000 plus 35% of the amount exceeding Rs. 6,000,000. This signifies a significant increase in the tax burden for higher-income earners.

The revised income tax slabs can be summarized as follows:

- Taxable income not exceeding Rs. 600,000: 0% tax rate.

- Taxable income exceeding Rs. 600,000 but not exceeding Rs. 1,200,000: 2.5% of the amount exceeding Rs. 600,000.

- Taxable income exceeding Rs. 1,200,000 but not exceeding Rs. 2,400,000: Rs. 15,000 plus 12.5% of the amount exceeding Rs. 1,200,000.

- Taxable income exceeding Rs. 2,400,000 but not exceeding Rs. 3,600,000: Rs. 165,000 plus 22.5% of the amount exceeding Rs. 2,400,000.

- Taxable income exceeding Rs. 3,600,000 but not exceeding Rs. 6,000,000: Rs. 435,000 plus 27.5% of the amount exceeding Rs. 3,600,000.

- Taxable income exceeding Rs. 6,000,000: Rs. 1,095,000 plus 35% of the amount exceeding Rs. 6,000,000.

It is important to note that the tax rates for the lower slabs remain unchanged. These revisions aim to ensure a fair distribution of tax burden based on income levels and provide additional revenue for the government to meet its financial requirements.