Pakistan

Taxable period

The tax year is 1 July through 30 June.

Tax returns and statements

An individual is required to file a return of income with the tax authorities on a fiscal year basis (1 July through 30 June). Filing of a revised return requires prior approval of the Commissioner, subject to certain limitations and conditions. The Commissioner is now also empowered to grant approval for revision of a return for a bona fide omission or wrong statement.

Every resident taxpayer filing a return of income is required to file a wealth statement (in the prescribed format) along with the return of income. The Commissioner can also require any person to furnish the said statement. For revision of a wealth statement, an intimation has to be filed with the Commissioner, who is empowered to disallow/disregard such revision in case he/she is of the view that the same has not been made for correction of bona fide errors or omissions. A taxpayer has been allowed to make revision of a wealth statement up to a period of five years.  

Every resident taxpayer being an individual and having foreign income equal to or in excess of 10,000 United States dollars (USD) or having foreign assets with a value of USD 100,000 or more is now also required to file a separate statement of foreign income and foreign assets in a prescribed format. The Commissioner can also require any person to furnish such statement.

All individuals (including salaried persons) are required to file their return/wealth statement for the year ended 30 June by 30 September. Late filing shall be liable to penalty proceedings.

Persons whose income was subject to the final tax regime were previously required to file a statement prescribed in the law in lieu of a return of income; however, such requirement has now been omitted. The Federal Board of Revenue (FBR) is to prescribe returns for different classes of income or persons, including those covered by the final tax regime.

Tax authorities can require a person whose name is not appearing in the ATL to file an income tax return. Moreover, to enforce filing of return, they have powers to disable mobile phones, discontinue utility connections, and impose travel restrictions, with exemptions for certain individuals.

Filing of a revised return requires prior approval of the Commissioner, unless it is revised within 60 days, which has certain limitations and conditions. The Commissioner is also empowered to grant approval for revision of return for bona fide omission or wrong statement.

Payment of tax

Income tax is withheld from salaries by the employer. The amount to be withheld is determined by applying to the salary the average rate of tax on the estimated income of the employee for the fiscal year.

Advance tax is payable by an individual (other than a salaried individual) in four instalments if the latest assessed taxable income is in excess of PKR 1 million.

Statute of limitations

An audit of the tax return filed by a taxpayer can be conducted by the tax authorities within five years of the end of the financial year in which the return is filed. A person whose income tax affairs have been selected for audit in any of the preceding three tax years shall have immunity from selection of audit. However, amendment proceedings may be initiated other than by way of selection of audit.

Tax authorities can probe into the source of unexplained offshore assets and foreign-source income irrespective of any time limitation.

The time period to pass an amendment order is 1 year from the issuance of show cause notice.

Restriction on ineligible persons

Through Finance Act 2025, a new concept of 'Eligible Person' has been introduced to restrict certain economic transactions for 'Ineligible Persons.' These restrictions cover activities such as booking, purchasing, or registering motor vehicles, engaging in high-value immovable property transactions, conducting securities transactions, and undertaking certain banking activities. Such transactions are limited to only eligible persons.  

An Eligible Person is defined as one who has filed a tax return for the previous year and has sufficient resources in the wealth statement or financial statement (at least 130% of declared cash and equivalent assets including fair market value of gold, net realizable value of stocks, bonds, receivables, or any other cash equivalent asset)

However, there are certain exemptions where the above restrictions are not applicable, such as purchase of specific vehicle types, investment in securities up to notified limits, and dealings by public companies or non-residents. 

Topics of focus for tax authorities

The tax authorities mainly focus their attention on taxpayers other than salaried individuals.