Government’s Sleight of Hand: Increased Tax Burden on Salaried Class Hidden Behind 35% Cap

Since the budget for 2024-25 was announced by a qualified person from the private sector, there were many hopes for actual tax reforms and relief for common citizens. However, there are many gimmicks in the budget announced by the Finance Minister to give the impression that tax is being collected from the real estate sector, which is not true. In the budget, it has been announced to increase the tax on capital gains from real estate. However, the tax rate is not the main issue in the manipulation of the real estate sector. The main issue is the low FBR valuation, which allows black/corruption money to be parked in real estate. Capital gains tax will apply only when there is a major capital gain on a transaction. However, real estate dealers will be buying, selling, and showing gains based on FBR values, resulting in no reportable gains, and the actual realized gain will remain outside the tax net.

Moreover, the Finance Minister has announced that the overall maximum tax rate for the salaried class has been kept intact. However, in reality, the slab rates have been amended, resulting in a higher tax impact on the salaried class. This has been done without considering that the salaried class already pays more than its due share of tax and is already struggling with high inflation, coupled with the non-availability of security, gas, electricity, and water. The attached table shows the overall impact of the changes in tax slabs for the salaried class.