Federal Budget 2024-25 Overview: Discover key highlights of Pakistan’s Federal Budget 2024-2025, focusing on significant changes in income and sales tax impacting non-filers and late filers

On June 12, 2024, Pakistan’s much-anticipated federal budget for the fiscal year 2024-2025 was unveiled, introducing sweeping changes across various income and sales tax categories. These revisions bring significant implications for taxpayers, particularly non-filers and late filers. At Tax Jurist Pakistan, we understand the profound impact these changes can have on both individuals and businesses. This article delves into the key aspects of the budget, with a primary focus on the adjustments to income tax and sales tax. By breaking down these critical elements, we aim to provide a clear understanding of the new financial landscape shaped by this budget.

Income Tax Changes in Federal Budget 2024-25:

Personal Income Tax: Tax rates for non-salaried individuals and AOPs have increased from 35% to 45%.
Income Tax for Salaried Individuals: The rate remains at 35%, but incremental rates have risen across different income slabs.
Advance Tax on Immovable Property Purchases:
- Up to Rs. 50 million: 3% for filers, 12% for non-filers, 6% for late filers.
- Rs. 50-100 million: 3.5% for filers, 16% for non-filers, 7% for late filers.
- Over Rs. 100 million: 4% for filers, 20% for non-filers, 8% for late filers.
Advance Tax on Immovable Property Sales:
- Up to Rs. 50 million: 3% for filers, 10% for non-filers, 6% for late filers.
- Rs. 50-100 million: 3.5% for filers, 10% for non-filers, 7% for late filers.
- Over Rs. 100 million: 4% for filers, 10% for non-filers, 8% for late filers.
Capital Gains on Properties: For properties acquired on or after July 1, 2024, the rates are 15% for filers and 15-45% for non-filers.
Capital Gains on Securities: For securities acquired on or after July 1, 2024, the tax rate will be 15% for filers, and 15-45% for non-filers.

Dividend Income: Tax on dividends from mutual funds earning 50% or more income from profit on debt has increased from 15% to 25%.
Capital Gains from Mutual Funds and REITs: The tax rate has increased from 10% to 15%.
Profit on Debt: Non-filers will now pay 35% tax on interest income, up from 30%.
Super Tax: High-income non-salaried individuals and AOPs face an effective rate of up to 55%.
Exporters: Normal tax regime applies, with a 1% tax on export proceeds treated as a minimum tax (excluding IT exports).
Exemption Certificates: Withholding tax exemption certificates have been withdrawn; only reduced rate certificates will be issued in certain cases.
Penalties for Non-filers and Late Filers: Enhanced penalties include restrictions on foreign travel (except NICOP Holders, Minor & Students), higher advance tax rates, blocking of mobile sim connections, and discontinuation of utility connections.
Advance Tax on High-Value Assets: Increased rates for motor vehicles, property transactions, and other high-value assets.

Sales Tax Changes:

Withdrawal of Exemptions:
- Edible Vegetables & Fruits from Afghanistan
- Medical & Diagnostics Kits/Equipment
- Supplies to Charitable Hospitals
- Imports by Non-Profit Institutions
- Specified stationery items (now taxed at 10%)
New Exemptions:
- Natural Disasters: Imports exempted
- Milk (excluding branded): Exempted
- Iron & Steel Scrap: Exempted
Changes in Sales Tax Rates:
- LPG: Increased from 10% to 18%
- Hybrid Electric Vehicles: 18%
- Petroleum Products: Zero-rating converted to exemption
- Medicaments: Increased from 1% to 18%
- Mobile Phones: Standard rate of 18%; phones over $500 taxed at 25%
- POS Tier 1 Retailers: Standard rate of 18% on finished articles of textile and leather
- Personal Computers and Laptops: Increased from 5% to 10%
Withholding Sales Tax:
- Registered persons must withhold 80% of the sales tax on specified goods (lead batteries, gypsum, coal, etc.)
Administrative and Compliance Changes:
- FBR can set minimum prices for Third Schedule Goods
- Sales tax to be paid on advance payments
- Broadened scope of tax fraud responsibility
- Default surcharge calculated at SBP’s KIBOR rate plus 3%, replacing the existing 12%

The new budget emphasizes timely tax filing, introducing the term ‘late filers’ to stress the importance of fulfilling tax obligations on time.

Secure Your Financial Future with Tax Jurist Pakistan

At Tax Jurist Pakistan, our expert tax law firm headquartered in Gujrat, Punjab, is dedicated to providing top-tier tax return filing services. With our extensive knowledge of the latest federal budget changes, including significant income and sales tax updates, we ensure your compliance and financial well-being. Our services are available in Gujrat, Kharian, Sara-i-Alamgir, Jhelum, Wazirabad, Gujranwala, Sialkot, Sambrial, Daska, and nationwide. Don’t navigate these complex tax changes alone—trust our experienced team to handle your tax needs efficiently and accurately. Contact Tax Jurist Pakistan today and secure your financial future with confidence.