High-income individuals to face 10 per cent tax surcharge; Here’s all you should know

ISLAMABAD: The Government of Pakistan has imposed a 10 percent surcharge on the tax liability of individuals, which earns both salaried individuals and Associations of Persons (AOP) over Rs 10 million annually.

As per the details, this surcharge will be deducted directly from the salaries of the affected employees by their employers.

The move comes after Pakistan’s parliament approved a tax-heavy finance bill on Friday, ahead of expected talks with the International Monetary Fund (IMF) for a crucial $6-8 billion loan. Is.

The bill aims to strengthen Pakistan’s fiscal stance amid economic challenges, including an expected inflation rate of 13.5 percent for June.

Finance Minister Muhammad Aurangzeb introduced the bill, which was subject to parliamentary debate and amendments by the ruling coalition led by Prime Minister Shehbaz Sharif and opposition parties.

Pakistan’s national budget, unveiled on June 12, set a tough tax revenue target of 13 trillion rupees ($46.66 billion) for the fiscal year starting July 1, up 40 from the current year. The percentage is a significant increase.

This ambitious target marks Pakistan’s efforts to secure an IMF bailout and economic recovery in the region’s slowest growing economy.

According to a finance ministry report, the budget aims to promote sustainable and inclusive growth amid rising inflationary pressures. Estimated consumer price inflation for June 2024 is expected to be between 12.5% ​​and 13.5%, up from 11.8% in May.

Major provisions of the budget include a 48 percent increase in direct taxes and a 35 percent increase in indirect taxes compared to the revised estimates for the current fiscal year. Non-tax revenue sources, such as petroleum levies, are expected to come up to 64 percent.

Certain sectors will face higher taxes, including a proposed 18 percent tax on textiles, leather products and mobile phones, as well as a tax on capital gains from real estate transactions. Additionally, workers will experience an increase in direct income taxes.