PBC apologies for mistake, now says Pakistan’s salaried class paying up to 3 times more tax than in India

After posting a detailed chart showing how Pakistan’s salaried class is paying up to 9.4 times more tax than in India, the Pakistan Business Council (PBC) apologised for its mistake and said the tax burden on this side of the border is 3 times higher than in the neighbouring country.

It had earlier said that for two countries with almost the same cost of living, income tax on salaried employees in Pakistan is up to 9.4 times that in India.

The development comes after the Pakistani government, running short of liquidity, imposed further taxes on the salaried class in the Budget 2024-25 presented on June 12.

In the Finance Bill 2024, the government has increased tax liability for all income groups that earn more than Rs50,000. Islamabad says it wants to generate an additional Rs70 billion in taxes from this group.

While the government did not touch the income tax exemption threshold – which still stood at Rs50,000 – liability increased across all other levels of salaries. For example, a person earning Rs100,000 a month will now pay Rs2,500 a month, up from the earlier level of Rs1,250 – showing 100% increase.

It also imposed a 10% surcharge on those whose total incomes go beyond Rs10 million during a fiscal year, on top of the higher rate of taxes.

On the other hand, the Indian government, in its bid to boost consumption, cut income tax rates for some citizens in its budget announcement this Tuesday.

The government revised a system introduced under which annual income between 0.3 million Indian rupees and 0.7 million Indian rupees will now attract a 5% tax rate as compared to income between 0.3 million Indian rupees and 0.6 million Indian rupees earlier.

The PBC, which has previously voiced concerns against higher taxation, compared the deductions between Pakistan and India in its post on Thursday.

The PBC had also argued that taxed employees in Pakistan certainly do not get better value for their contribution. “Our tax system is far from equitable,” it had said.

The salaried class in Pakistan has already been protesting against the increase in taxation on the salaried group.

Finance Minister Muhammad Aurangzeb has said that relief would be provided to the salaried group, but when it was ‘possible’. With the staff-level agreement for a three-year programme now reached, many believe any relief is still some time away.

The story, originally published July 25, 2024, was updated on July 26, 2024 to incorporate the error made by the PBC.