Govt Taxes on Middle Class in Pakistan Compared With India

There is a huge difference between tax slabs in Pakistan and India but one thing is common for sure: the middle class faces the brunt of most tax slabs in both countries and gets excluded from most of the benefits. However, this bracket of breadwinners in Pakistan is facing a much, much heavier tax burden. According to the latest data seen by ProPakistani, a direct comparison between the two countries shows that Pakistani taxpayers are being charged higher rates on lower income brackets, whereas India offers more relief to middle-income earners. Finance Minister Muhammad Aurangzeb last year emphasized the necessity of increasing tax revenues to break the cycle of reliance on International Monetary Fund (IMF) bailouts. The Finance Division aims to raise Rs. 13 trillion by end-June 2025 and since last year has targeted various sectors, including the salaried class, retail, and export businesses. Some harsh measures for tax evasion have also been introduced to ensure compliance. In India, those earning up to INR 1.2 million (PKR 3.6 million) are completely exempt from income tax. In Pakistan, however, only incomes up to PKR 600,000 (INR 200,000) are exempt from tax slabs. Beyond this, the disparity grows more severe. Indians earning between INR 1.2 million and INR 1.5 million (PKR 3.6 million to PKR 4.5 million) pay a flat 15 percent tax compared to Pakistanis in the same income range who get taxed at a rate of 25 percent. Indian taxpayers earning up to INR 2.5 million (PKR 7.5 million) pay 25 percent, whereas Pakistanis with the same income are taxed at 30 percent. For individuals earning over INR 2.5 million, India imposes a maximum tax rate of 30 percent, but in Pakistan, this threshold is much lower—anyone earning over PKR 4.1 million (INR 1.36 million) is taxed 35 percent. So Pakistan’s middle class, particularly salaried professionals, is shouldering a disproportionate share of the tax burden compared to India. While India has structured its tax system to provide a good amount of relief to middle-income earners, Pakistan’s policies are strangling its salaried class with both hands tied behind their backs.