FY25 Budget: What you need to know – Mettis Global Link

June 13, 2023 (MLN): The government of Pakistan announced the budget for 2024-2025 on Wednesday. Here’s a rundown of the key changes you need to know:

The federal budget for FY25 has a total outlay of Rs 18.877 trillion, a 30% increase over the previous year’s budget.

Revenue from gross receipts is expected at 17.8tr, a significant increase of 46% year-on-year from last year’s revised estimates.

Real GDP growth is expected to be 3.6% in FY25, while nominal GDP is expected to increase by 17% to 124.15 tr.

The average inflation rate is expected to be 12%.

Relief for government employees

The government has proposed the increase of monthly minimum wage from Rs 32,000 to Rs 37,000.

Salaries for government employees from grades 1 to 16 would be increased by 25% and from 20% for those in grades 17 to 22.

Also, it is proposed to increase the pension of retired employees 15%.

Personal income tax

FRI salaried classthose earning annual income up to Rs 600,000 will remain tax exempt.

However, all other income tax slabs for salaried individuals have been revised, resulting in significantly higher taxes at all income levels.

Pay grade – Files
Taxable income	Tax rate
Not more than 600,000 rubles	0%
600,000 – 1,200,000 Rs	5% of the amount above Rs.600,000
1,200,000 – 2,200,000 Rs	Rs 30,000 + 15% of amount exceeding Rs 1,200,000
2,200,000 – 3,200,000 Rs	Rs 180,000 + 25% of amount exceeding Rs 2,200,000
3,200,000 – 4,100,000 Rs	Rs 430,000 + 30% of amount exceeding Rs 3,200,000
4,100,000 Rs	Rs 700,000 + 35% of amount exceeding Rs 4,100,000

Here’s how the revised tax rates will affect net pay:

FRI without salary class, those earning an annual income of up to Rs 600,000 will remain tax exempt.

However, all other income tax slabs for salaried individuals have been revised, with progressive tax rates ranging from 15-45%.

Non-Salary Class – Registrar
Taxable income	Tax rate
Not more than 600,000 rubles	0%
600,000 – 1,200,000 Rs	15% of the amount above Rs.600,000
1,200,000 – 1,600,000 Rs	Rs 90,000 + 20% of amount exceeding Rs 1,200,000
1,600,000 – 3,200,000 Rs	Rs 170,000 + 30% of amount exceeding Rs 1,600,000
3,200,000 – 5,600,000 Rs	Rs 650,000 + 40% of amount exceeding Rs 3,200,000
5,600,000 Rs	Rs 1,610,000 + 45% of amount exceeding Rs 5,600,000

Higher tax rates for late depositors

There will be higher taxes late filings. Currently, non-filers are subject to higher tax rates to increase the cost of doing business and to force them to file their returns.

Now a new tax rate for a new category of people who are late.

The government defined late filers as persons who become filers after the due date of return filing only for the sake of a specific transaction to avoid higher fees for non-filers.

For such late depositors, a new tax rate is being introduced which is higher rate compared to files but lower ones than non-deliverers.

Real Estate Income Tax

IN purchase of propertythere will be progressive tax rates categorized into three categories.

Property Value	Tax rate for files	Tax rate for Whistleblowers	Tax rates for non-declarants
Up to 50 million rubles	3%	6%	12%
50 million – 100 million rubles	3.5%	7%	16%
Over 100 million rubles	4%	8%	20%

IN sale of real estate, there will be progressive rates of advance taxes categorized into three categories.

Property Value	Tax rate for files	Tax rate for Whistleblowers	Tax rates for non-declarants
Up to 50 million rubles	3%	6%	10%
50 million – 100 million rubles	4%	7%	10%
Over 100 million rubles	5%	8%	10%

The budget also proposed a flat 15% tax rate on profits from disposal of real estate acquired on or after 01 July 2024 by depositors, regardless of the holding period.

For non-declarants, the government proposed progressive tax rates based on the prescribed slab rates in Division I of Part I of the First Schedule, with a minimum tax rate of 15%.

Capital Gains Tax (CGT) on securities

Securities purchased on or after 1 July 2024 will be taxed at a flat rate of 15% for files, regardless of retention period.

For non-declarants, the profit will be taxed at normal rates with taxable slabs ranging from 15-45%.

Additionally, capital gains income from mutual funds and collective investment schemes has also increased from 10% to 15%.

Dividend income from mutual funds

The rate of dividend derived by a mutual fund which earns 50% or more of its income from profit on debt is proposed to rise from 15% to 25%.

This is being done to reduce arbitrage between individuals deriving income from profit on debt and persons deriving income from dividends from mutual funds deriving income from profit on debt.

Higher taxes on cell phones

Mobile phones should be taxed at a standard rate of 18%. While mobile phones worth more than $500 will remain chargeable at the existing rate 25%.

In addition, the government has proposed to increase the withholding tax rate from 15% to 75% for the use of mobile phones for persons whose names appear in the general income tax order for non-submission of the return even after giving the notice.

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Posted on: 2024-06-13T12:17:18+05:00