Residents are taxed on their Pakistan and foreign-source income. Determination of taxable income of an individual varies according to the tax residential status of the individual in Pakistan during the tax year (1 July through 30 June).
Total worldwide income of a resident is subject to tax in Pakistan except where particular income is not to be taxed in Pakistan under an Agreement for Avoidance of Double Taxation.
A non-resident individual is taxed only on Pakistan-source income, including income received or deemed to be received in Pakistan or deemed to accrue or arise in Pakistan.
Personal income tax rates
The following tax rates apply in case of taxable income earned by individual taxpayers:
|Taxable income (PKR)
||Tax on column 1 (PKR)
||Tax on excess amount
|Over (column 1)
Where the income exceeds PKR 800,000, there would be a minimum tax liability of PKR 2,000.
The withholding rate for dividends is 15% for filers and 20% for non-filers.
The withholding tax (WHT) rate for interest is 10% for filers and 17.5% in case of non-filers (for amount exceeding PKR 500,000).
Local taxes on income
The only significant tax on salaries is federal income tax.