Tax plays an essential role in the economy of every country in the world. Pakistan is one of those countries where people pay lower taxes compared to Pakistan’s GDP. The government supports all expenditures through taxes and provides many types of services such as public works, schools, road infrastructure, hospitals, and defense budgets. Through Taxation, the Government of Pakistan can carry out various types of activities. Unfortunately, however, Pakistan is one of the countries with the lowest tax collection rates.
Does income tax apply to all income?
If your income is below the deductible limit of INR 600,000 (regardless if you are an employee), you do not have to pay income tax. The Final tax rates after approval of the Finance Act are: Income below PKR 600,000 per year (PKR 50,000 per month) is not tax deductible. From PKR 600,000 he earns Rs1. 2 million per year (50,000-100,000 PKR per month) he pays 2.5% tax on amounts over 600,000 PKR. But for non-salaries or businesses own if annual income is below then 400,000 no tax will be deducted. If the annual income of non-salaries or business owners is more than 400,000 tax will be deducted by FBR laws.
Income tax return
As per FBR laws, the return must be filed every year by an individual or business that earns money during a fiscal year. Tax applies on a specific amount with a net annual income of more than 6 lakh are legally required to file Income Tax Return before the deadline. It is strongly recommended that you Final tax rates return before the FBR deadline to avoid further lawsuits.
Filer vs Nonfiler
Filer persons have more benefits than non-filer. Because the filer person has paid low text according to the given by different slabs of FBR. We have the following comparison of the Final tax rates
Description | Filer / Active | Non-Filer / Non- Active |
Purchase of Property | 2% | 7% |
Sale of Property | 2% | 4% |
Tax on saving account profit | 15% | 30% |
Dividend & Prize Bonds | 15% | 30% |
Tax on Goods / services | Normal | Double |
Motor Vehicle Leasing | 0% | 12% |
Purchase of vehicle | Normal | Triple |
Registration of New Vehicle | Normal | Double |
Vehicle Annual Token Tax | Normal | Double |
Tax on Commission | 12% | 24% |
Tax on Electricity bills | 0% | 7.5% |
Sale from Manufacturer to distributors, dealers, wholesalers. | 0.1% | 0.2% |
Sale from Retailers | 0.5% | 1% |
Property auction | 5% | 10% |
In the case of salaried individuals, there are 11 tax slabs with a progressive tax rate ranging from 5% to 35% of income.
To find out what tax rate applies to you, multiply your gross monthly salary by 12 and match it with the corresponding slab.
- For income above Rs600,000 but not exceeding Rs1,200,000, individuals will pay 5% of the amount exceeding Rs600,000.
- For income above Rs1,200,000 but not exceeding Rs1, 800,000, individuals will pay Rss30,000 plus 10% of the amount exceeding Rs1,200,000.
- For income above Rs1,800,000 but not exceeding Rs2,500,000, individuals will pay Rs90,000 plus 15% of the amount exceeding Rs1,800,000.
- For income above Rs2,500,000 but not exceedingRs3,500,000, individuals will pay Rs195,000 plus 17.5% of the amount exceeding Rs2,500,000.
- For income above Rs3,500,000 but not exceeding Rs5,000,000, individuals will pay Rs370,000 plus 20% of the amount exceeding Rs3,500,000.
- For income above Rs5, 000, 000 but not exceeding Rs8, 000, 000, individuals will pay Rs670,000 plus 22.5% of the amount exceeding Rs5,000,000.
- For income above Rs8,000,000 but not exceeding Rs12,000,000, individuals will pay Rs1,345,000 plus 25% of the amount exceeding Rs8,000,000.
- For income above Rs12,000,000 but not exceedingRs30,000,000, individuals will pay Rs2,345,000 plus 27.5% of the amount exceeding Rs12,000,000.
- For income above Rs30,000,000 but not exceeding Rs50,000,000, individuals will pay Rs7,295,000 plus 30% of the amount exceeding Rs30,000,000.
- For income above Rs50,000,000 but not exceeding Rs75,000,000, individuals will pay Rs13,295,000 plus 32.5% of the amount exceeding Rs50,000,000.
- For income above Rs75,000,000, individuals will pay Rs21,420,000 plus
Income tax slabs for non-salaried persons
For non-salaried persons deriving income exceeding Rs400,000, eight taxable slabs of income with Tax
Rates ranging from 5% to 35% are being introduced in the following manner:
- Where the taxable income does not exceed Rs400,000, individuals will pay no tax.
- For income above Rs400,000 but not exceeding Rs600,000, individuals will pay 5% of the amount exceeding Rs400,000.
- For income above Rs600,000 but not exceeding Rs1,200,000, individuals will pay Rs10,000 plus 10% of the amount exceeding Rs600,000.
- For income above Rs1,200,000 but not exceeding Rs2,400,000, individuals will pay Rs70,000 plus 15% of the amount exceeding Rs1,200,000.
- For income above Rs2,400,000 but not exceeding Rs3,000,000, individuals will pay Rs250,000 plus 20% of amount exceeding 2,400,000.
- For income above Rs3,000,000 but not exceeding Rs4,000,000, individuals will pay Rs370,000 plus 25% of the amount exceeding Rs3, 000,000.
- For income above Rs4,000,000 but not exceeding Rs6,000,000, individuals will pay Rs620,000 plus 30% of the amount exceeding Rs4,000,000
For income above Rs6,000,000, but not exceeding Rs1,220, 000 plus 35% of the amount exceeding Rs6,000,000
How to Final tax rates
To file the income tax individual or business must register NTN. So following documents are required for NTN registration for salary person or business income.
NTN registration for salary person
- Copy of CNIC
- Mobile number and email address
NTN registration for the business person
- Copy of CNIC
- Copy of recently paid electricity bill of business
- Rent agreement or copy of ownership documents
- Mobile number and email address
- Nature of business
Once your NTN gets registered the next step is to file your income tax return. So following documents are required to file an income Tax return.
Document required of salary person for income tax return
- Tax deduction certificate from employer of the previous year
- Bank account statement
- List of personnel assets along with their value of the purchase
- Bank loan and other liabilities if any
- Utility bills in your home
Document required of business income for Final tax rates
- Tax deduction certificates from companies, banks’s or third party
- Summary of net sales invoices
- Summary of expenses in business
- Bank account statement
- List of personal assets
- Utility bill under name of the business
WHY YOU choose us
At TAC Consultants our team is very experienced with highly educated professionals working with international and national companies to smooth their business. Our team has very vast experienced working with the Federal board of revenue (FBR), the Punjab revenue authority (PRA), the Securities exchange commission of Pakistan (SECP), the Pakistan single window (PSW), the Law chamber of commerce related matter, and we provide services to help our clients to avoid the hectic task of taxation so they can fox on their business growth.
Due to lack of information or misguided by unprofessional a lot of does not properly how much tax should be paid on their income.