Revised Income Tax Slabs Unveiled in Pakistan's 2025-26 Federal Budget

Strategic Insights -

The revised income tax slabs in Pakistan's federal budget for fiscal year 2025-26 have been unveiled, providing insights into the country's taxation policies. As per the revised slabs, individuals earning up to Rs600,000 per year will be exempted from income tax, while those earning between Rs600,001 and Rs1.2 million will pay 1 percent income tax. The budget also introduces significant fiscal reforms, new taxation measures, and adjustments in key sectors.

Key Takeaways:

  • The revised income tax slabs will exempt individuals earning up to Rs600,000 per year from income tax.
  • Individuals earning between Rs600,001 and Rs1.2 million annually will pay 1 percent income tax.
  • People earning between Rs1.2 million and Rs2.2 million annually will have to pay a fixed tax of Rs6,000 plus 11 percent income tax on the amount exceeding Rs1.2 million.
  • The Benazir Income Support Programme (BISP) budget has seen a 20% rise, with the largest-ever allocation.
  • The government has approved arrests in Sales tax fraud involving Rs50 million or more.
  • DETENTION The government will detain individuals who issue fake invoices, forge records, destroy evidence, or attempt to flee abroad, with arrests approved by an FBR committee and detainees to be presented before a magistrate within 24 hours.
  • Additional grants have been allocated, but the opposition alleges unfair distribution.

Statistics:

  • The federal budget for fiscal year 2025-26 totals Rs 17.573 trillion.
  • The revised income tax slabs have six slabs, ranging from 0% to 35% tax rates.
  • Individuals earning up to Rs600,000 per year will be exempted from income tax, with no tax deductions.
  • Individuals earning between Rs600,001 and Rs1.2 million will pay 1 percent income tax, with an example calculation of Rs1,000 on a Rs100,000 monthly income.
  • People earning between Rs1.2 million and Rs2.2 million annually will have to pay a fixed tax of Rs6,000 plus 11 percent income tax on the amount exceeding Rs1.2 million.
  • The Benazir Income Support Programme (BISP) budget has seen a 20% rise.
  • The government has approved arrests in Sales tax fraud involving Rs50 million or more.
  • DETENTION The government will detain individuals who issue fake invoices, forge records, destroy evidence, or attempt to flee abroad.

Sources:

  • Report by an unnamed news outlet
  • Federal Budget for fiscal year 2025-26
  • Presentation by Finance Minister Muhammad Aurangzeb