Pakistan

Major developments in the tax laws through Finance Act, 2025 relating to individuals are summarised as follows:

• The income tax slab rates have been decreased for the salaried individuals whose annual salary income is up to 3.2 million Pakistani rupees (PKR) (please see the Taxes on personal income section for details).
• Tax credit on profit on debt on loans for construction or acquisition of a house is reintroduced with certain modifications (please see the Deductions section for details).
• The rate of surcharge for the salaried Individuals whose annual taxable salary exceeds PKR 10 million has been reduced from 10% to 9% (please see the Taxes on personal income section for details).

• Retrospective restoration of 25% tax rebate to full time teachers and researchers up to 30 June 2025 (please see the Deductions section for details).
• The advance tax on purchase of immovable properties has been reduced (please see the Income determination section for details).
• The withholding tax (WHT) rate for profit on debt payments has been increased from 15% to 20% (please see the Income determination section for details).
• Significant restrictions introduced for certain ‘ineligible persons’ for purchasing vehicles, purchasing immovable properties, operating bank accounts, etc. (please see the Other issues section for details).
• The Federal Board of Revenue (FBR) is empowered to seek certain information relating to high-risk persons from banking companies.
• Pension and annuity from former employer exceeding PKR 10 million for persons below 70 years of age is made taxable at the rate of 5% of the amount exceeding PKR 10 million. However, commutation of pension from approved pension fund of pension is exempt from tax.
• The rate of advance tax on cash withdrawals exceeding PKR 50,000 in a day by a person whose name does not appear on Active Taxpayer List is now enhanced from 0.6% to 0.8%.