FBR Income Tax Slabs in Pakistan for 2023-2024

Prior to filing an income tax return, a taxpayer is required to register with the Federal Board of Revenue (FBR), the revenue collection agency for the Government of Pakistan. Individuals may register themselves through the Iris Portal. However, the principal officer of an Association of Persons (AOP) or a company is required to register by visiting the Regional Tax Office (RTO). An AOP refers to individuals who come together to carry out a business and can include partnerships, joint ventures or other associations for a common purpose. 

There are specific requirements that must be met prior to tax registration, which differ depending on whether the registration is put through by an individual, an AOP or a company.

The Income Tax Ordinance, 2001 provides income tax tables for individuals and companies. 

What is income tax? It is the payment made by individuals or companies to the government based on their earnings which may be derived from employment, pensions, investments or other income. Familiarizing yourself with these tax tables which identify applicable FBR income tax slabs and income tax rates is essential for effective tax planning and to stay compliant with the tax laws of Pakistan. Different tax brackets on income may apply depending on the business structure and vehicle used. 

Here you will learn more about:

• headline tax rates 
• personal income tax (PIT) slabs for individuals and Associations of Persons
• capital gains tax rates for resident persons
• corporate income tax (CIT) rates
• alternate corporate tax rates
• corporate income super tax rates
• turnover tax for corporations
• capital gains tax for corporations
• withholding tax rates for residents and non-residents
• general sales tax rates

Headline Tax Rates in Pakistan

Personal Income Tax (PIT) Slabs in Pakistan 2023-2024

An individual who intends to proceed with tax e-enrolment must ensure they have relevant information available at the time of enrolment. This includes their contact details, nationality, the accounting period applicable in their circumstance, and in the case of salary income, the name of their employer. If property income is involved, then the individual must include the address of the property concerned.

Personal Income Tax Due Dates

Personal Income Tax for Individuals 

Personal Income Tax for Individuals and Associations of Persons 

Personal Income Tax on Property for Individuals and Associations of Persons

Capital Gains Tax for Resident Persons in Pakistan

Where a resident individual owns property in Pakistan, they will be taxed on deemed income at the rate of 5% of the fair market value of the property. As the rate of tax on such income is fixed at 20%, this translates to an effective tax rate of 1% of the fair market value of the property.

Certain exclusions apply, including but not limited to:

• any immovable property from which income is already chargeable to income tax
• where the fair market value of the property does not exceed PKR 25 million
• where property is owned by a provincial government or local government 
• where property is owned by a local authority, development authority, a builder or developer for land development and construction, and provided these persons are registered with the Directorate General of Designated Non-Financial Business and Professions (DNFBPs)

Under anti-money laundering laws, the FBR must ensure that DNFBPs (such as real estate agents, dealers in precious metals and stones and FBR-supervised accountants) comply with anti-money laundering and counter financing of terrorism obligations. Certain other bodies such as law firms and financial institutions are supervised by regulatory authorities and self-regulatory bodies.

Corporate Income Tax Rates in Pakistan 2023-2024

Alternate Corporate Tax (ACT)

Alternate corporate tax (ACT) is levied on all companies (with certain exceptions) whereby companies are required to pay a higher corporate tax. 

The following categories of companies are exempt from this requirement: 

• insurance companies 
• companies engaged in the exploration and production of petroleum 
• banking companies
• companies that currently have a reduced rate of tax

The following categories of income are not subject to the levy of the ACT:

• exempt incomes
• capital gain on the disposal of specified listed securities
• income that is entitled to tax credit due to equity investment
• the income of non-profit organizations, trusts and welfare institutions

The minimum ACT liability of a company is either 17% of accounting income or the corporate tax liability as determined under the Income Tax Ordinance, whichever is greater. 

Corporate Income Tax Due Dates

Corporate Income Super Tax Rates

Banking companies with an income exceeding PKR 300 million are required to pay the rate of 10% for super tax.

Turnover Tax for Corporations

Where the tax payable by a company is less than 1.25% of the company’s turnover, the company must pay a minimum tax equivalent to 1.25% of the turnover except in situations where the company is exempt from doing so. 

If tax paid exceeds the normal tax liability, the amount paid may be carried forward for adjustment against the company’s tax liability for the three subsequent tax years.

Capital Gains Tax for Corporations in Pakistan

Where a company sells, exchanges or transfers capital assets held and a gain is realized, the capital gains are taxable at the normal corporate rate of tax. In the first year of the capital assets being held, it is taxable to the extent of 75% of the total gain. However, in subsequent years of being held, the capital assets will then be fully taxable.

Capital gains tax (CGT) may be charged at the following rates:

• on the disposal of immovable properties - rates vary between 2.5% - 15% depending on the holding period and whether the property is an open plot, constructed property or flat. No tax is charged where the holding period exceeds six years
• on the disposal of listed securities - rates vary between 2.5% - 15% depending on the holding period. No tax is charged where the holding period exceeds six years
• on the disposal of Special Convertible Rupee Accounts (SCRAs) and Roshan Digital Accounts (RDAs) - a blanket withholding tax rate on capital gains arising
• on the disposal of assets by non-residents outside Pakistan - either 10% of the fair market value of the asset or 20% of the amount representing the difference between fair market value and cost of the acquisition of the asset, whichever is the higher

Withholding Tax Rates for Residents and Non-Residents in Pakistan

Withholding tax (WHT) is applicable to: 

• several types of payments made to resident taxpayers by prescribed persons
• payments to non-residents in respect of Pakistan-sourced income

As Pakistan is a signatory to certain double taxation treaties (DTTs), WHT rates vary for residents and non-residents in Pakistan and depending on whether the individual or company is in a treaty country or not.

General Sales Tax Rates in Pakistan