The National Assembly has passed an amended Finance Bill 2023, marking a significant milestone in the country’s ongoing financial saga. With the revised bill meeting the rigorous conditions set forth by the International Monetary Fund (IMF), hopes are high that this last-ditch effort will unlock a vital infusion of bailout funds.

The IMF had previously voiced its disappointment with the country’s initial budget, deeming it a missed opportunity to implement a more progressive and comprehensive tax framework.

However, determined to rectify this setback, Finance Minister Ishaq Dar introduced a series of new taxes and expenditure cuts, which were instrumental in garnering the Assembly’s approval.

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Undoubtedly, the standout feature of this momentous bill is the introduction of fresh taxation measures projected to generate an impressive Rs215 billion in revenue.

In a bold move towards fairness and equity, the Finance Bill also sanctions an increase in tax rates for higher income brackets within both the salaried and non-salaried classes.

Outlined below are the revised income tax slabs for the year 2023, reflecting a more balanced approach to income taxation:

Taxable income rangeTax rate
Not exceeding Rs600,0000% (Tax-free)
Rs600,001 – Rs1,200,0002.5% of the amount exceeding Rs600,000
Rs1,200,001 – Rs2,400,000Rs15,000 + 12.5% of the amount exceeding Rs1,200,000
Rs2,400,001 – Rs3,600,000Rs165,000 + 22.5% of the amount exceeding Rs2,400,000
Rs3,600,001 – Rs6,000,000Rs435,000 + 27.5% of the amount exceeding Rs3,600,000
Exceeding Rs6,000,000Rs1,095,000 + 35% of the amount exceeding Rs6,000,000

1. Tax-free threshold:

Individuals with a taxable income not exceeding Rs600,000 are exempt from income tax obligations.

2. Progressive tax rates:

For those with taxable incomes exceeding Rs600,000 but not surpassing Rs1,200,000, a tax rate of 2.5 per cent will be levied on the amount exceeding Rs600,000.

3. Unchanged tax rate for salaried individuals:

Salaried individuals with taxable incomes ranging from above Rs1,200,000 to Rs2,400,000 will continue to face a tax rate of Rs15,000 plus 12.5 per cent of the amount exceeding Rs1,200,000.

4. Moderate income brackets:

Taxpayers with taxable incomes exceeding Rs2,400,000 but not surpassing Rs3,600,000 will experience a tax rate of Rs165,000 plus 22.5 per cent of the amount exceeding Rs2,400,000.

5. Higher income brackets:

Individuals falling within the income range of Rs3,600,000 to Rs6,000,000 will face a tax rate of Rs435,000 plus 27.5 per cent of the amount exceeding Rs3,600,000.

6. Top earners:

Those with taxable incomes exceeding Rs6,000,000 will be subject to a tax rate of Rs1,095,000 plus 35 per cent of the amount exceeding Rs6,000,000.

With this bold and progressive tax structure, the Finance Bill 2023 promises to forge a more equitable financial landscape.

As the nation eagerly awaits the release of the much-needed bailout funds, this resolute step taken by the National Assembly stands as a testament to the government’s determination to safeguard the country’s economic well-being and chart a path towards sustainable growth.