Income Tax Rate

If you’re earning 400,000/- PKR or more in a year, then you’re subject to income tax. The government determines the tax rate that applies to your earnings each year, and in this regard, a tax slab is made so as to classify each taxpayer based on their annual earnings.

Wealth Reconciliation Statement

If your yearly salary is PKR 600,000 or more, you're required to file an income tax return through IRIS (an online software/system for e-filing). With tax return filing comes the need to also submit your wealth reconciliation statement.

Income Tax Rate

What is a Wealth Statement?

As required by law, businesses and individuals must submit a statement of their income, profit, loss, and expenses in one form. This is known as a Wealth Statement. If you want to reconcile your last year's wealth with this year's wealth statement, here is a basic technique for doing so: First, list out all the items that fall under each category. Then, calculate the totals for each category. Next, compare the totals from last year to this year's totals. Finally, make any adjustments that are necessary.

Wealth

Wealth (last year): PKR 1500 Wealth (current year): PKR 2000 Increase/Decrease in wealth: PKR 500 (call it ‘A’) PKR 500 is what we call ‘A’, which is the increase or decrease in your wealth from last year to this year.

Income Sources

Welcome to our income calculator!

To get started, please enter your salary income in Pakistani Rupees: PKR 500

Next, please enter any rental income you may have: PKR 900

Now, please enter any business income you may have: PKR 200

Finally, please enter any foreign remittances you may have: PKR 100

Your total sources of income are: PKR 1700 (we'll call this "B").

Now, deduct the following from your income:

-Personal expenses: PKR 500

-Other expenses (e.g. marriage of sister/son): PKR 500

-Random taxes paid: PKR 200

This totals your expenses at PKR 1200 (we'll call this 'C').

Income sources (B) minus expenditures (C) should equal PKR 500. So, in this example, your income sources (B) would need to be greater than your expenses by at least PKR 500 in order for you to have a positive balance.

Supportive Documents Required for Filing Tax return

This is a list of the documents that you will need in order to apply for your salary certificate and tax deduction certificate from your employer.

- Your CNIC (original and photocopy)

- Your email ID

- Your bank account statement from 01st July 2020 till 30th June 2021

- A list of your personal assets along with their value of purchase/acquisition

- A utility bill in your name (if applicable)

If you do not have an NTN number and are not registered with FBR, we can help you register and get an NTN number issued so you can file your tax returns. Normally, it takes 1-2 days to get an NTN number, but to become an active filer with FBR can take 2-3 days. So, if you're not an active filer, hurry up and register.

If you have any more questions about getting an NTN number or filing tax returns, please let us know. We're here to help!

FAQs

The income tax rate in Pakistan varies by income level and is based on a progressive tax system. As of the latest tax year, individuals earning up to PKR 600,000 annually are exempt from tax. For income above PKR 600,000, rates range from 5% to 35% depending on the income bracket. Higher- income earners pay a higher percentage in taxes. For specific rates applicable to each bracket, it’s best to consult the latest tax rate chart provided by the Federal Board of Revenue (FBR) or a tax professional.

You can calculate your income tax by identifying your total annual income and applying the relevant tax rate based on the FBR’s tax brackets. FBR also offers an online tax calculator on its website, which can provide an accurate calculation based on your earnings and other financial factors. You simply need to input your income details, and the calculator will determine your tax liability.

For salaried individuals, the income tax rate in Pakistan is determined by income brackets, similar to self-employed individuals but with slightly different rates and exemptions. Salaried individuals earning up to PKR 600,000 annually are exempt from tax. For income above PKR 600,000, the rate begins at 5% and progressively increases. Specific rates vary annually, so it’s helpful to check the latest FBR guidelines.

Yes, the income tax rate for businesses in Pakistan differs from individual income tax rates. Corporations and companies are subject to corporate income tax, with a flat rate of around 29% for most sectors, though this may vary by industry and specific tax incentives. Individual income tax, on the other hand, is progressive and varies according to income brackets.

Yes, the government of Pakistan offers various tax rebates and exemptions to encourage savings, investments, and certain expenditures. These include deductions for charitable donations, investments in government securities, and contributions to pension funds. Additionally, some income from agriculture is exempt. It’s advisable to consult the FBR or a tax advisor to determine eligibility for any specific rebates or exemptions.

Pakistani residents are taxed on their global income, including income earned abroad. The tax rate on foreign income is the same as that applied to local income, based on the individual’s total annual income and relevant tax bracket. However, Pakistan has double taxation agreements with some countries, which can reduce or eliminate taxes on foreign income if taxes were already paid in another country.

You can file your income tax return in Pakistan online through the Federal Board of Revenue’s (FBR) Iris system. The system requires you to create an account, fill out the required forms, and submit them. It’s also possible to file with the help of a tax consultant if you need assistance. The filing process typically requires income details, deductions, and tax paid.

Failure to file an income tax return in Pakistan can result in penalties and fines. The exact penalty depends on the income level and the duration of non-compliance. Penalties may include a percentage of the payable tax and possible legal actions for prolonged non-compliance. It’s best to file on time to avoid these consequences.

Lahore Office

Block E 1, Johar Town , Lahore, Punjab , Pakistan 54000
Mr. Ahmed Burhan

Faisalabad Office

Burhan Center, 97-99, Gulistan Market Railway Road, Faislabad, Pakistan
Mr. Ahmed Burhan

UK Office

Associate Office (London)
Mr. Ahmed Burhan

Income Tax Rate

Wealth Reconciliation Statement

Income Tax Rate

What is a Wealth Statement?

Wealth

Income Sources

Now, deduct the following from your income:

Supportive Documents Required for Filing Tax return

FAQs

1. What is the current income tax rate in Pakistan?

2. How can I calculate my income tax in Pakistan?

3. What is the income tax rate for salaried individuals in Pakistan?

4. Is there a difference in income tax rates for businesses versus individuals in Pakistan?

5. Are there any tax rebates or exemptions available in Pakistan?

6. What is the tax rate on foreign income for residents in Pakistan?

7. How can I file my income tax return in Pakistan?

8. What are the penalties for not filing an income tax return in Pakistan?

Lahore Office

Faisalabad Office

UK Office

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