The 2024-25 Tax Slabs at a Glance
Under the Finance Act 2024, salaried individuals are taxed on their annual income as follows. These slabs apply only to salaried income — business income has different rules.
| Annual Income (Rs) | Tax Rate | Tax Formula |
|---|---|---|
| Up to 600,000 | 0% | Nil |
| 600,001 – 1,200,000 | 5% | 5% of amount above 600,000 |
| 1,200,001 – 2,200,000 | 15% | Rs 30,000 + 15% above 1,200,000 |
| 2,200,001 – 3,200,000 | 25% | Rs 180,000 + 25% above 2,200,000 |
| 3,200,001 – 4,100,000 | 30% | Rs 430,000 + 30% above 3,200,000 |
| Above 4,100,000 | 35% | Rs 700,000 + 35% above 4,100,000 |
💡 These are marginal rates — you only pay the higher rate on the portion of income that falls in that slab, not on your total income.
Worked Examples
Example 1 — Rs 80,000/month salary
Annual income: Rs 960,000 → Falls in the 5% slab.
Tax = (960,000 − 600,000) × 5% = Rs 18,000/year (Rs 1,500/month).
Effective rate: 1.88%.
Example 2 — Rs 150,000/month salary
Annual income: Rs 1,800,000 → Falls in the 15% slab.
Tax = Rs 30,000 + (1,800,000 − 1,200,000) × 15% = Rs 30,000 + Rs 90,000 = Rs 120,000/year (Rs 10,000/month).
Effective rate: 6.67%.
Example 3 — Rs 250,000/month salary
Annual income: Rs 3,000,000 → Falls in the 25% slab.
Tax = Rs 180,000 + (3,000,000 − 2,200,000) × 25% = Rs 180,000 + Rs 200,000 = Rs 380,000/year (Rs 31,667/month).
Effective rate: 12.67%.
What About Allowances?
Your taxable salary includes basic pay plus all taxable allowances. However, some components reduce your tax:
- Medical allowance up to 10% of basic salary is exempt from tax.
- Provident Fund contributions by the employer are not taxable in your hands.
- Leave fare assistance (LFA) once a year is exempt up to the actual amount paid.
- Tax credit for investment in life insurance or approved pension funds up to Rs 2 million at 30% credit.
Super Tax (High Earners)
Individuals earning above Rs 150 million per year are subject to an additional Super Tax of 10% on their income above that threshold, introduced in the Finance Act 2022 and maintained in 2024-25. This is separate from the slab tax above.
How Employers Deduct Tax (WHT)
Your employer is legally required to deduct income tax at source every month and deposit it with FBR. The employer divides your projected annual tax by 12 and deducts that amount each month as Withholding Tax (WHT). At year-end, you file a return to reconcile any difference.
If you have additional income (rental, freelance, profit on savings accounts), you must declare it in your annual return — the tax on that may be different from the slab rates above.
How to Reduce Your Tax Legally
- Invest in an approved pension fund (VPS) — contributions are tax-deductible up to 20% of income.
- Claim medical allowance exemption if your employer pays it separately.
- Pay life insurance premiums — eligible for 30% tax credit.
- File your tax return on time to avoid additional 0.1%/month late filing surcharge.
- Register as a filer — non-filers pay higher withholding rates on bank transactions, property purchases, and vehicle registration.
📌 Always verify the latest slabs on the FBR official website (fbr.gov.pk) or consult a tax advisor, as Finance Acts can be amended mid-year.