Income tax is applicable on everyone who is making a living, but due to a general lack of awareness, most people don’t file returns for their income. With a population of over 190 million, around a mere 1 percent of the Pakistani citizens file their income tax returns.
This tends to create problems for the government as well. A big majority of citizens are subjected to withholding taxes to forcefully obtain taxes on all spending and people end up paying their share of income tax regardless of whether they submit income returns or not. In most cases, people are subjected to taxes even if they don’t even qualify as a taxpayer for income purposes.
In order to ensure that as a taxpayer, you aren’t subjected to more than your fair share of them, the solution is to submit your tax returns so that you can apply for a refund on your withholding taxes. However before that, you will need to know if you are subject to the tax and how much is applicable to you.
Let’s find out how much you need to pay based on what you earn in a year.
For Salaried Individuals
This one is for those who are working on a salary.
In order to assist you, in working out your taxable income, we have shared below a list of annual income tax slabs for salaried individuals based on their earning level and the applicable tax:
- Income under Rs. 400,000 – No tax applicable
- Income between Rs. 400,001-500,000: Tax is 2% on the amount above Rs. 400,000
- Income between Rs. 500,001-750,000: Tax is Rs. 2,000 +Â 5% on the amount above Rs. 500,000
- Income between Rs. 750,001-1,400,000: Tax is Rs. 14,500 +Â 10% on the amount above Rs. 750,000
- Income between Rs. 1,400,001-1,500,000: Tax is Rs. 79,500 +Â 12.5% on the amount above Rs. 1,400,000
- Income between Rs. 1,500,001-1,800,000: Tax is Rs. 92,000 +Â 15% on the amount above Rs. 1,500,000
- Income between Rs. 1,800,001-2,500,000: Tax is Rs. 137,000 +Â 17.5% on the amount above Rs. 1,800,000
- Income between Rs. 2,500,001-3,000,000: Tax is Rs. 259,500 +Â 20% on the amount above Rs. 2,500,000
- Income between Rs. 3,000,001-3,500,000: Tax is Rs. 359,500 +Â 22.5% on the amount above Rs. 3,000,000
- Income between Rs. 3,500,001-4,000,000: Tax is Rs. 472,000 + 25% on the amount above Rs. 3,500,000
- Income between Rs. 4,000,001-7,000,000: Tax is Rs. 597,000 + 27.5% on the amount above Rs. 4,000,000
- Income exceeds Rs. 7,000,000: Tax is Rs. 1,422,000 + 30.0% on the amount above Rs. 7,000,000
For Self-Employed Individuals or Freelancers
People who make their earning independent of an employer or do freelance work are subjected to higher income tax under the Pakistan government’s Income Tax Ordinance 2001.
The list is of annual income slabs and respective applicable tax is shown below:
- Income under Rs. 400,000 – No tax applicable
- Income between Rs. 400,001-500,000: Tax is 7% on the amount above Rs. 400,000
- Income between Rs. 500,001-750,000: Tax is Rs. 7,000 + 10% on the amount above Rs. 500,000
- Income between Rs. 750,001-1,500,000: Tax is Rs. 32,000 + 15% on the amount above Rs. 750,000
- Income between Rs. 1,500,001-2,500,000: Tax is Rs. 144,500 + 20% on the amount above Rs. 1,500,000
- Income between Rs. 2,500,001-4,000,000: Tax is Rs. 344,500 + 25% on the amount above Rs. 2,500,000
- Income between Rs. 4,000,001-6,000,000: Tax is Rs. 719,400 +Â 30% on the amount above Rs. 4,000,000
- Income exceeds Rs. 6,000,000: Tax is Rs. 1,319,000 + 35.0% on the amount above Rs. 7,000,000
Note: The above income slabs and the applicable taxes are on annual basis.
Note 2: Taxed individuals might also have rebates on their income based on certain criteria or field of work.
Note 3:Â Any withholding tax you have paid will be subtracted from your taxable income.
Note 4: Salaried individuals need to ask their employer for evidence (annual pay slip) before submitting tax returns as employers deduct taxes when salary is paid.
Note 5: Businessmen are taxed at different rates than salaried or non-salaried individuals as their income is taxed at variable rates depending on the type of business. Businessmen should head to FBR’s website for more details concerning their tax rates.
govt looting with both hands
Do you have any reference for “For Self-Employed Individuals or Freelancers” tax details ?
Self-Employed or Freelancers are not obliged to pay income tax on Home-Remittances.. In-fact no tax applicable on Home-Remittances…
They’re obliged to file the return irrespective of whether the earning is taxable or not.
This tax then goes to London and Dubai for our politicians to use at their discretion. We’re actually paying bhatta to our respective rulers to live in our country!
im unemployed yet still paying taxes..what the hell
how?
On purchasing of goods
Can you please also guide about providing software consultancy (and selling softwares) abroad and receiving foreign remittances.
Just open a bank account with your company name and register your company with FBR, SBP and PSEB. If I am not wrong IT companies are exempted from tax till 2019.
I’ll pay tax. As I do when I am overseas. So why not pay to my own land then.
You should (we are too) but GoP is not providing us anything in return.
Well I take it the different way, my part is my obligation.
Of course, but our govt is not giving us ‘anything’ in return.
Apko government say kiya chahiye?
Bhai trolling kisi aur jagah krlo.
Tax k badlay main kia milta hai kisi bhi developed mulk ko dekh lo pata lag jaega.
I’m not trolling. just asking.
I am jobless. Currently working as internee without pay. Still Paying taxes.
how are you still paying taxes?
Sales tax and Batha e.g (WHT) tax.
LOL
Bro first figure the difference between sales and income tax out. You are paying sales tax not income tax.
Ooh. I did not know that. My bad. You mean to say I pay 17% GST and what are other 8%? Are this 8% bhatta applied by Operators?
Call your operator and they will tell you tax break. Don’t try to act silly.
Could you write a new article with the complete title please? “This is the Amount of Income Tax You (Should) Pay on Your Earnings and This is What You Should Expect in Return For It”. Thank you!
Expecting something from this government?
Pakistan main new aae ho bhai?
It’s not about this government or that government. All governments have always given lollipops in return for the gunda taxes they charge us.
Unfortunately our awaam is also beghairat so there’s no chance of a revolution anytime in the next few decades…
By ‘all governments’ you mean ‘our previous governments’ or …..
Bhai 36 dafa yehi baat kar chuky ho. Government ka rishta chahiye apko tax kay badly main?
Bilkul chahiay, rishtay krwatay ho aap?
Does anyone knows about Sindh Sales Tax? Is it applicable on IT companies?
Tu iska matlab ProPK bhi tax bharti hai?
Nahi yeh offshore company k zariye tax evasion kartay hain.
Tu phir tu ek article ProPK ko is point par bhi likhna chahiye ke how to do this?
abey…ku Aamir ki band bajwani hay….rozana kam hote hay kiya uske sath….
ProPK is very funny. Last year they made post about how Google is avoiding paying taxes in Pakistan even though they are offering services here.
And then I asked how ProPK paid taxes on its Google Adsense ads.
And Admin said “Our taxes are deducted at source.”
????
If Google isn’t paying taxes then how and why are they deducting at source? Ha HA
Article is “Google is Holding a YouTube Launch Event in Pakistan” from September last year.
To all the complainers
Regardless of the fact what you get in return, how can you say you pay taxes? I am not saying that you dont pay anything but what proof do you have?
Every year government asks you following questions:
1- what have you earned?
2- what have you paid?
3- what do you own?
You can do so through filing of income tax return. To avoid question 1 & 3, you dont file return, it means you dont tell govt. what you paid so how can you claim what you paid. Think before you act. You can only claim when you declare.
Think of a room where lost and found items are kept. The items remain there till someone claims them. Otherwise those are given to anybody they want if no one claims. Same is the case with your paid taxes at source. Claim it (through filing of return) before it gets looted.
Mera pyara bhai. This looks great on paper. In reality, government never pays you back what they overcharged! Except the WHT returned by (some) banks which is automatically returned if you are in the tax filers list that the bank has.
Also, people expect the welfare of the people be taken care of if they pay their taxes, which does not happen in this country. Its only the election time (or a government crisis time such as dharna or panama), when garbage collection schemes, laptop schemes, yellow cab schemes, green bolan schemes, metro bus schemes and what not show up as the *advertised* welfare steps. I recall every 4-5 years, when the election is near, drainage pipes are put, new transformers installed, streets and pavements are fixed, roads carpetted, & votes bartered in exchange for rice, wheat and sugar when the elections are near.
Everyone knows that huge sums of money are skimmed as kickbacks, in the name of all the above mentioned (and other schemes). Nobody wants to pay tax when they know that more than 75% of that will ultimately go into someone’s personal pockets instead of doing any good to the country. As a matter of fact, corruption lies & deceit is part of every person (man women and children).
I agree with you, but it does not mean that we stop claiming our right. By declaration, we establish our right. I know, we dont get refunds but we can adjust it in future against our taxes payable. Other benefit is that all our hard earned and tax paid money will become white and on the records. If any objection is raised by anybody we will have no issue.
But if you want to be same as our current so-called corrupt leaders who earn millions and show zero tax liability in their returns, then its your own decision to be like them. Good Luck.
Duniya ko galat kehne se khud sahi nhn hota banda. Jawab hamesha khud ke lye hi dena parta he dusro ke lye nhn.
Having a corrupt government isn’t a justification for not paying taxes. I am no fan of PML-N but I pay my share of taxes. You only get to complain when you’re doing your part.
Bhai salary pe tax kat jaata hai khud aur baaqi har cheez pe aap ko pay krna parta hai kyun k price main hi include hota hai.
Any withholding tax you have paid will be subtracted from your tax *liability
Freelancers serving to international clients and gettings their remittances via bank (IT Foriegn Income) are exempted. Please make your post to have that note.
Do you have a source about exemption?
Section # 133 of The Income Tax Ordinance, 2001 – Second Schedule
Moreover Local RTO Also Confirmed this.
Offering services outside Pak on monthly basis and getting payments as remittances monthly in local bank, how can I return file to IRIS ?
any luck ? I am confused about this too
“Note 3: Any withholding tax you have paid will be subtracted from your taxable income.”
Wrong.
Witholding tax is actually advance income tax paid and is subtracted from net tax, NOT taxable income.
My uncle told me if you are selling software and bringing foreign currency then you are exempt from tax. Someone please confirm
Did you find anything related to that?
Do you have any idea for the tax to be paid upon income earned outside Pakistan and been sent via banking channel.
No tax on foreign remittances.
Properties bought with same money in Pakistan, do they requires tax to be paid.
If you buy property and then sell it and make money then you pay the tax.
If I will hold them for years, do I continue pay on them every year without selling them.
111. Unexplained income or assets: (4) Sub-Section (I) does not apply: (a) to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is en-cashed into rupees by a schedule bank and a certificate from such bank is produced to that effect
Thanks…!
Solution is only ‘Consumer Courts’
Without wealth tax this nation is doomed.and the fun part wealth tax is only targeted at the wealthy guess who exempted that Musharraf Sahib nay.
middle class say kab thak deti rahay gee.
Last year this nation for go more than 2-3 billion of refunds
Enjoy the 50 rs coin you deserve it
are under 18s required to pay taxes
Dear Sir, I am a foreigner and working in a manufacturing units in Lahore on a business visa. I am now getting 15% deduction from salary for income tax?
1. Would you please let me know If I have to pay income tax for salary of $3,000 per month of 15% tax?
2. If so what are the benefit I get ?
3. Would this be claimable at the year end?
I GOT EARNING 100,000 TO 150,000 FROM EBAY. GET MY MONEY VIA HOME REMITTANCE. DO I NEED TO PAY TAX ON IT???
what about the tax on pension above Rs 750000 of retired govt officers
Please help me out of this I am working as software Consultant or can say IT support as a freelancer , I am working with a company in US thay are sending me amount its a on goind project , should i have to pay tax or i have some rebate on it
What about tax on cars?
Subkuchsell