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Pakistan
Individual - Taxes on personal income
Last reviewed - 01 August 2024Pakistan levies tax on its residents on their worldwide income. 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. Salary is considered Pakistan-source income to the extent to which it relates to employment exercised in Pakistan, wherever paid.
Personal income tax rates
The following tax rates apply where income of the individual from salary exceeds 75% of taxable income:
| Taxable income (PKR) | Tax on column 1 (PKR) | Tax on excess (%) | |
| Over (column 1) | Not over | ||
| 0 | 600,000 | 0 | |
| 600,000 | 1,200,000 | 5 | |
| 1,200,000 | 2,200,000 | 30,000 | 15 |
| 2,200,000 | 3,200,000 | 180,000 | 25 |
| 3,200,000 | 4,100,000 | 430,000 | 30 |
| 4,100,000 | 700,000 | 35 | |
The following tax rates are applicable in other cases (for individuals and associations of persons [AOPs]):
| Taxable income (PKR) | Tax on column 1 (PKR) | Tax on excess (%) | |
| Over (column 1) | Not over | ||
| 0 | 600,000 | 0 | |
| 600,000 | 1,200,000 | 15 | |
| 1,200,000 | 1,600,000 | 90,000 | 20 |
| 1,600,000 | 3,200,000 | 170,000 | 30 |
| 3,200,000 | 5,600,000 | 650,000 | 40 |
| 5,600,000 | 1,610,000 | 45 | |
Individuals and AOPs with taxable income exceeding PKR 10 million in a year must pay a surcharge equal to 10% of their income tax.
In the case of an AOP that is a professional firm prohibited from incorporating by any law or the rules of the body regulating their profession, a maximum of 40% tax rate has been prescribed.
Withholding requirements
In general, the entire tax is deducted at source on payment of salary to individuals at rates mentioned above for salaried individuals. Varying withholding tax (WHT) rates are prescribed for different goods, services, and contracts provided and executed by individuals and AOPs, based on status of the vendor being an active taxpayer or not.
Local taxes on income
The only significant tax on salaries is federal income tax.
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Tax Partner, PwC Pakistan
Tax Partner, PwC Pakistan