Employment Tax
Pakistan | Finance Bill 2024-25 amendments
Summary
This bulletin should be read in conjunction with our previous bulletin. This bulletin provides an overview of the main employment and income tax amendments that have been passed by the National Assembly and has now become an Act. The tax law is applicable from July 1, 2024.
The detail
Introduction of surcharge on taxable income exceeding PKR 10M
The amended Bill provides for the addition of Section 4AB, which introduces a surcharge on the income of individuals (both salaried and non-salaried) which exceeds PKR 10 million. The surcharge is set at 10% of the income tax levied on the income of the individual.
In the case of a 10% surcharge on Salaried Individuals, employers as withholding agent is responsible for withholding this surcharge in addition to the normal tax deductions as per salary slabs.
In the calculation of the average tax rate, the proposed change includes adding the surcharge under Section 4AB to the amount of tax that would be payable if the denominator were the employee’s taxable income for that year.
The following table illustrates the new tax bands and surcharge for salaried individuals:
| Tax Year 2025 income tax rates and bands | |||
| Taxable income (Rs) | Tax rate | Surcharge | |
| 0 | 600,000 | Tax exempt | – |
| 600,000 | 1,200,000 | 5% | – |
| 1,200,000 | 2,200,000 | 15% | – |
| 2,200,000 | 3,200,000 | 25% | – |
| 3,200,000 | 4,100,000 | 30% | – |
| 4,100,000 | 9,999,999 | 35% | |
| 10,000,000 | 35% | 10% | |
Amendment to travel restrictions under income tax general order
The Finance Bill initially proposed empowering the Board to restrict Pakistani citizens from traveling abroad through an Income Tax General Order under Section 114B(2)(d), except for those holding NICOP, minors, students, and other classes of persons specified by the Board. The Amended Bill now includes individuals traveling abroad for Hajj or Umrah in the exempted category, exempting them from such restrictions if they haven’t filed their income tax return.
This amendment ensures that individuals traveling for religious obligations are not affected by travel restrictions imposed due to non-filing of income tax returns, enhancing fairness, and addressing specific travel scenarios under the tax framework.
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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