Tax Filing AY 2022-23 Vs 2023-24: Expert Comparative Analysis

tax filing ay 2022-23 vs 2023-24

Tax Filing AY 2022-23 is now a bit changed when compared to current AY 2023-24. The GoP has made certain changes in applicable tax that every tax payer must know before filing his return for AY 2023-24.

The new tax rates are applicable with the passing of the annual budget by the government of Pakistan before the start of the new financial year. This year, Finance Act 2023 has introduced new tax rates effective July 1, 2023. The financial impact of the payable taxes as per revised tax slabs in comparison to the last financial year is mentioned hereunder. Fortunately, there is no change in the tax bracket for salaried persons up to the annual salary of Rs.2,400,000 (which means those who are getting a salary not more than 200,000 a month).

Tax Changes in Annual Year 2023-24

  • For Salaried persons with an annual salary of less than Rs.2,400,000, there is no change in the tax bracket
  • A person with a monthly salary of 200,000 will have to pay the same taxes as of last annual year 2022-23

Salary Tax Slabs AY 2023-24

The following salary slabs are defined as per the amended Finance Act 2023 for the annual tax year 2023-24. The applicable withholding tax rates can be accessed from FBR’s website. One can easily calculate his income tax by using Beingfiler free of cost, state of art Tax Calculator for 2023-24.

Salary Tax Slabs Tax Filing AY 2022-23

Last year, the following salary slabs were defined as per the Finance Act 2022 for the annual tax year 2022-23. Every taxpayer should know before his Tax Filing AY 2022-23.

Comparison of Tax Slabs for Salaried Class for FY 2023-24 Vs 2022-23

Notably, the last 2 slabs of AY 2022-23 are now combined in 2023-24 with slab starting at 6,000,000 with a fixed amount of tax of Rs.1,095,000 and a flat rate of 35% over 6,000,000.

Withdrawal of Deductible Allowances and Tax Credits effective FY 2022-23 onward

The following deductible allowance and tax credits which were previously available to individuals till FY 2021-22, stand withdrawn effective tax year 2023 so no longer available for tax filing AY 2022-23. The withdrawal is still effective in tax year 2024.

  • Profit paid on debt incurred on house financing under section 60C
  • New Investment in mutual funds, Sukuks, life insurances, and shares of listed companies Etc under section 62
  • Health insurance policies purchased section under 62A

Tax Adjustments

Despite the withdrawal of tax credits and deductible allowances by the government on the purchase of life insurance and health policies, investment in new shares and mutual funds, and tax allowance on interest paid on house-loan since the tax year 2023, still the salaried person can take advantages of the following adjustments in the shape of advance taxed paid, tax credits and allowances like they did in Tax Filing AY 2022-23.

indirect tax grocery

Adjustments of Tax Credits & Allowances

Below are the details of allowances, advance withholding taxes, and common tax credits that are adjustable for tax on salary income:

  • Investment in VPS (Voluntary Pension Schemes)
  • Donation or Zakat paid to approved charitable organizations
  • Allowance for educational expenses of children if the annual taxable salary is up to PKR1,500,000 then lower of
  • 5% of tuition fee
  • 25% of taxable income
  • 60,000 X No. of children

Adjustments of Advance Tax

  • Advance Tax paid on the purchase of Vehicle
  • Advance Tax Paid on Mobile Phone, Internet, and Telephone Bills
  • Advance Tax Deducted on Credit Card Transactions for International Payments
  • Advance Tax paid on electricity bills exceeding Rs.25,000, charged to non-filers
  • Advance tax collected when buying and selling immovable property
  • Payment of advance tax as double tax charged in case of non-filers on interest on savings, prize bond winnings and dividends Etc

FAQs

October 31, 2023 was the extended last of filing income tax returns 2023 by FBR. This date was extended for a month, after the lapse of the previous last date i.e. September 30, 2023.

The new tax slabs are mentioned here under

For Individuals, separate buttons for Salaried Returns and Normal Returns are available on IRIS home screen.

The individuals or companies can ask for 15 days extension in online filing tax returns, by submitting a request to the commissioner. After submitting a request, a person can proceed to file his tax returns. For the delay of more than 15 days, a person can still file his return but FBR charges a fine for the late submission of the returns for each financial year.

Conclusion

The government of Pakistan has introduced the new tax rates for the fiscal year 2023-24 while maintaining the existing brackets for salaried individuals up to an annual salary of Rs. 2,400,000. Certain changes in tax slabs for higher incomes are outlined, with a notable consolidation for those earning above Rs. 6,000,000. The withdrawal of deductible allowances and tax credits is emphasized under the new rules too, despite opportunities for adjustment provisions like voluntary pension schemes and charitable donations. A concise overview of key changes in tax filing under the evolving tax landscape is discussed in article above. The taxpayers are advised to learn about the changes for Tax Year 2023-24 as compared to previous tax filing AY 2022-23.

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