Recent developments in the law relating to individuals are summarised as follows:
- The concept of ‘resident individual’ is extended to include citizens of Pakistan not resident in any other country or those who were not in any one foreign country for more than 182 days.
- Slab rates for salaried individuals are revised to enhance tax incidence on higher income slabs.
- Penalty for non-filing / late filing of income tax return is enhanced to higher of 0.1% of tax payable for each day of default or PKR 1,000 per day, with maximum penalty of 200% of the tax payable and minimum penalty of PKR 10,000 for salaried individual and PKR 50,000 for others.
- Tax on value of capital assets in Pakistan is introduced at a rate of 1%, applicable on fair market value of certain immovable properties of resident persons situated in Pakistan.
- Super tax is levied on taxpayers having income in excess of PKR 150 million, ranging from 1% to 4%. Enhance super tax rate of 10% is applicable for one year in case of certain specified sectors having income in excess of PKR 300 Million. For details, please refer to ‘Taxes on corporate income’ section.
- Capital gains tax provisions relating to immovable properties situated in Pakistan revamped aiming to collect tax on sale of open plots held for a period of less than six years. Capital gains on immovable properties held outside Pakistan to be taxed at normal rate irrespective of holding period.
- Advance tax rate for buyer and seller of immovable property is enhanced from 1% to 2%. Except for overseas Pakistanis, the rate shall be increased to 4% for seller and 5% for buyer in case they are inactive taxpayers. Further, advance tax on sale of immovable property is to be collected irrespective of the holding period (earlier it was not collected where property was sold after four years).
- Tax credits for resident individuals on investments in listed securities and insurance policies as well as deductible allowances for all individuals on house loans shall no longer be available.
- Interest income on government securities shall now be subject to tax at normal slab rates instead of 15%.
- Rate of tax on income from Bahbood certificates reduced from 10% to 5%.
- Reduced rate of Capital gain tax on disposal of listed securities, based on holding period introduced for securities purchased post July 1, 2022.
- Withholding tax on remittances outside Pakistan through debit and credit cards is reinstated at a rate of 1% of the remitted amount.