Pakistan

Individual - Taxes on personal income

Last reviewed - 31 December 2019

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 where income of the individual from salary exceeds 75% of taxable income:

Taxable income Rate of tax
Where the taxable income does not exceed PKR 600,000. 0%
Where the taxable income exceeds PKR 600,000 but does not exceed PKR 1,200,000. 5% of the amount exceeding PKR 600,000
Where the taxable income exceeds PKR 1,200,000 but does not exceed PKR 1,800,000. PKR 30,000 + 10% of the amount exceeding PKR 1,200,000
Where the taxable income exceeds PKR 1,800,000 but does not exceed PKR 2,500,000. PKR 90,000 + 15% of the amount exceeding PKR 1,800,000.
Where the taxable income exceeds PKR 2,500,000 but does not exceed PKR 3,500,000. PKR 195,000 + 17.5% of the amount exceeding PKR 2,500,000.
Where the taxable income exceeds PKR 3,500,000 but does not exceed PKR 5,000,000. PKR 370,000 + 20% of the amount exceeding PKR 3,500,000.
Where the taxable income exceeds PKR 5,000,000 but does not exceed PKR 8,000,000. PKR 670,000 + 22.5% of the amount exceeding PKR 5,000,000.
Where the taxable income exceeds PKR 8,000,000 but does not exceed PKR 12,000,000. PKR 1,345,000 + 25% of the amount exceeding PKR 8,000,000.
Where the taxable income exceeds PKR 12,000,000 but does not exceed PKR 30,000,000. PKR 2,345,000 + 27.5% of the amount exceeding PKR 12,000,000.
Where the taxable income exceeds PKR 30,000,000 but does not exceed PKR 50,000,000. PKR 7,295,000 + 30% of the amount exceeding PKR 30,000,000.
Where the taxable income exceeds PKR 50,000,000 but does not exceed PKR 75,000,000. PKR 13,295,000 + 32.5% of the amount exceeding PKR 50,000,000.
Where the taxable income exceeds PKR 75,000,000. PKR 21,420,000 + 35% of the amount exceeding PKR 75,000,000.

The following tax rates are applicable in other cases (for individuals a association of persons):

Taxable income Rate of tax
Where the taxable income does not exceed PKR 400,000 0%
Where the taxable income exceeds PKR 400,000 but

does not exceed PKR 600,000

5% of the amount exceeding PKR 400,000
Where the taxable income exceeds PKR 600,000 but

does not exceed PKR 1,200,000

PKR 10,000 + 10% of the amount exceeding PKR 600,000
Where the taxable income exceeds PKR 1,200,000 but does not exceed PKR 2,400,000 PKR 70,000 + 15% of the amount exceeding PKR 1,200,000
Where the taxable income exceeds PKR 2,400,000 but does not exceed PKR 3,000,000 PKR 250,000 + 20% of the amount exceeding PKR 2,400,000
Where the taxable income exceeds PKR 3,000,000 but does not exceed PKR 4,000,000 PKR 370,000 + 25% of the amount exceeding PKR 3,000,000
Where the taxable income exceeds PKR 4,000,000 but does not exceed PKR 6,000,000 PKR 620,000 + 30% of the amount

exceeding PKR 4,000,000

Where the taxable income exceeds PKR 6,000,000 PKR 1,220,000 + 35% of the amount

exceeding PKR 6,000,000

Withholding requirements

The withholding rate for dividends is 15 % in normal cases, with a rate of 30% prescribed in case of persons not appearing on the ATL.

The withholding tax (WHT) rate for interest is applicable as follows:

  • 30% in case of persons not appearing in the ATL.
  • 15% in case of all other persons appearing on the ATL (10% in cases where interest income is PKR 500,000 or below).

Tax on banking transactions by persons not appearing on the ATL is applicable at 0.6% of the amount involved.

Local taxes on income

The only significant tax on salaries is federal income tax.