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Pakistan
Individual - Taxes on personal income
Last reviewed - 15 July 2021Pakistan 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.
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 | 1,800,000 | 30,000 | 10 |
| 1,800,000 | 2,500,000 | 90,000 | 15 |
| 2,500,000 | 3,500,000 | 195,000 | 17.5 |
| 3,500,000 | 5,000,000 | 370,000 | 20 |
| 5,000,000 | 8,000,000 | 670,000 | 22.5 |
| 8,000,000 | 12,000,000 | 1,345,000 | 25 |
| 12,000,000 | 30,000,000 | 2,345,000 | 27.5 |
| 30,000,000 | 50,000,000 | 7,295,000 | 30 |
| 50,000,000 | 75,000,000 | 13,295,000 | 32.5 |
| 75,000,000 | 21,420,000 | 35 | |
The following tax rates are applicable in other cases (for individuals and association of persons):
| Taxable income (PKR) | Tax on column 1 (PKR) | Tax on excess (%) | |
| Over (column 1) | Not over | ||
| 0 | 400,000 | 0 | |
| 400,000 | 600,000 | 5 | |
| 600,000 | 1,200,000 | 10,000 | 10 |
| 1,200,000 | 2,400,000 | 70,000 | 15 |
| 2,400,000 | 3,000,000 | 250,000 | 20 |
| 3,000,000 | 4,000,000 | 370,000 | 25 |
| 4,000,000 | 6,000,000 | 620,000 | 30 |
| 6,000,000 | 1,220,000 | 35 | |
Withholding requirements
In general, payments made on account of dividend, interest, royalty, and fee for technical services income derived from Pakistan sources are subject to a 15% withholding tax (WHT), which tax has to be withheld/deducted from the gross amount paid to the recipient. The majority of these payments do not attract enhancement of 100% even if the recipients are not appearing on the ATL.
From 1 July 2020, a WHT rate of 10% is applicable on payment of profit on debt to non-resident individuals on debt instruments issued by the Federal Government under the Public Debt Act, 1944. Such debt instruments must be purchased from a bank account maintained abroad, a Non-Resident Rupee Account Repatriable (NRAR), or a foreign currency account maintained with a banking company in Pakistan. The tax so deducted is a final tax, with no requirement for non-resident individuals to file a return of income in Pakistan.
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