In Pakistan there are two main taxes, one is Income Tax, whereas the other is General Sales Tax (also known as GST). Income tax is collected by the Federal Government (FBR) and is applicable on taxable income and profits. Whereas GST on services is collected by Provincial Revenue Authorities like Balochistan Revenue Authority (BRA), Khyber Pakhtunkhwa Revenue Authority (KPRA), Punjab Revenue Authority (PRA), Sindh Revenue Board (SRB), and Federal Board of Revenue (for ICT and Federal Areas). GST that is collected on services has to be filed with the respective Provinical Revenue Authority where the services were provided, whereas the GST collected on supply of all goods has to be filed with FBR. GST has to be filed with the respective provincial tax authority by the 15th of every month. Whereas Income tax has to be filed once a year at the close of the Financial Year.
Income tax is the liability of the salaried individual, AOP, or company. It is payable on the taxable income. National Tax Number (NTN) is issued by FBR in name of the sole proprietor, AOP, or company and income tax is paid against this NTN.
Sales tax is the liability of the client or person receiving services or the supply of goods from the individual sole proprietorship, AOP, or company. Sales Tax Registration Number (STRN or GST Number) is issued by FBR (for ICT & Federal Areas), BRA, KPRA, PRA, and SRB. GST is collected by the business and deposited against this number with the relevant provincial tax authority.
We can help you in registering with FBR as well as BRA, KPRA, PRA, and SRB.
Tax on Sole proprietorships in Pakistan
NTN is issued in name of the sole proprietor / owner.
Progressive tax based on the amount of profits. Slabs can be seen in the tax card below. Filing of annual income tax returns is mandatory. Tax returns for July 1 of the preceding year to June 30 of the current year have to be submitted by 30th September of the current year. Therefore if the current Financial Year is 2023-24 then that means the FY started on July 1, 2023 and ends on June 30, 2024 and that tax returns have to be filed by or before September 30, 2024.
Tax Rates (Sole Proprietors/Individual Business Owners)
Up to Rs 600,000 - (Zero 0%)
Rs 600,000 to Rs 800,000 : (7.5% of the amount above 600,000)
Rs 800,000 to Rs 1,200,000 : (15,000 + 15% of the amount above
800,000)
Rs 1,200,000 to Rs 2,400,000 : (75,000 + 20% of the amount above
1,200,000)
Rs 2,400,000 to Rs 3,000,000 : (315,000 + 25% of the amount above
2,400,000)
Rs 3,000,000 to Rs 4,000,000 : (465,000 + 30% of the amount above
3,000,000)
Above Rs 4,000,000 : (765,000 + 35% of the amount above
4,000,000)
Tax on AOP / Partnerships in Pakistan
NTN is issued in the name of Partnership (in case of Registered Partnership with Registrar of Firms)
Progressive tax based on the amount of profits. Slabs can be seen in the tax card below. Filing of annual income tax returns is mandatory on Partnership / AOP. In a registered partnership, NTN is issued in name of the partnership and the individual partners are not taxed separately. However, in an unregistered partnership, each partner has to file his/her own personal tax returns. Tax returns for July 1 of the preceding year to June 30 of the current year have to be submitted by 30th September of the current year. Therefore if the current Financial Year is 2023-24 then that means the FY started on July 1, 2023 and ends on June 30, 2024 and that tax returns have to be filed by or before September 30, 2024.
Tax Rates (AOP/Partnership Firm):
Up to Rs 600,000 - (Zero 0%)
Rs 600,000 to Rs 800,000 : (7.5% of the amount above 600,000)
Rs 800,000 to Rs 1,200,000 : (15,000 + 15% of the amount above
800,000)
Rs 1,200,000 to Rs 2,400,000 : (75,000 + 20% of the amount above
1,200,000)
Rs 2,400,000 to Rs 3,000,000 : (315,000 + 25% of the amount above
2,400,000)
Rs 3,000,000 to Rs 4,000,000 : (465,000 + 30% of the amount above
3,000,000)
Above Rs 4,000,000 : (765,000 + 35% of the amount above
4,000,000)
Tax on Limited Liability Partnerships (LLP) in Pakistan
NTN is issued in name of the LLP.
LLP is considered to be a body corporate under the law (see definitions in Limited Liability Partnership Act, 2017 and Section 80(2)(ii) of Income Tax Ordinance, 2001) meaning it is treated as a company. Therefore same taxation regime i.e. withholding, quarterly withholding statement, advance tax, minimum tax and other provisions that apply to companies also apply to LLPs.
The taxation of LLPs (Limited Liability Partnerships) may defeat the purpose of incorporating a LLP as this makes its tax compliance as complicated as that of a company.
Filing of annual income tax returns is mandatory and individual partners are not taxed separately. Tax returns for July 1 of the preceding year to June 30 of the current year have to be usually submitted by 31 December of the current year. Therefore if the current Financial Year is 2023-24 then that means the FY started on July 1, 2023 and ends on June 30, 2024 and that tax returns have to be filed by or before December 31, 2024.
Must withhold payments against services from service provider (if aggregate provision of services is above Rs. 30,000 per annum per provider) and must withhold taxes against supplies from supplier (if aggregate supply is above Rs. 75,000 per annum per supplier).
Taxed for the profits at the following body corporate / company rates:
a) Small Company 20% (if the company has less than 250 employees, has less than 50 million paid-up capital, and has less than 250 million revenue).
b) Other than small company 29%
c) Public company 29%
d) Banking company 39%
e) Minimum Turnover Tax of 1.25% is applicable where the actual tax payable by a company is calculated to be less than 1.25% of the turnover, except in few cases where the company is exempt from levy of minimum tax.
Tax on Private Limited Companies in Pakistan
NTN is issued in name of the Company.
Filing of annual income tax returns is mandatory and directors and shareholders are taxed separately. Usually tax returns for July 1 of the preceding year to June 30 of the current year have to be submitted by December of the current year. Therefore if the current Financial Year is 2020 then that means the FY started on July 1, 2019 and ends on June 30, 2020 and that tax returns have to be filed by or before December 31, 2020. Sometimes tax year could be from January 1 to December 31.
Must withhold payments against services from service provider (if aggregate provision of services is above Rs. 30,000 per annum per provider) and must withhold taxes against supplies from supplier (if aggregate supply is above Rs. 75,000 per annum per supplier).
Taxed for the profits at the following rates:
a) Small Company 20% (if the company has less than 250 employees, has less than 50 million paid-up capital, and has less than 250 million revenue).
b) Other than small company 29%
c) Public company 29%
d) Banking company 39%
e) Minimum Turover Tax of 1.25% is applicable where the actual tax payable by a company is calculated to be less than 1.25% of the turnover, except in few cases where the company is exempt from levy of minimum tax.
Tax on Foreign Company Branch / Liaison Offices in Pakistan
NTN is issued in name of the Branch Office or Liaison Office.
Filing of annual income tax returns is mandatory. Tax returns for July 1 of the preceding year to June 30 of the current year have to be submitted by December of the current year. Therefore if the current Financial Year is 2020 then that means the FY started on July 1, 2019 and ends on June 30, 2020 and that tax returns have to be filed by or before December 31, 2020. Sometimes tax year could be from January 1 to December 31.
Taxed for the profits at the following rates:
a) 35% for Branch Office.
b) No Tax for Liaison Office as commercial activity not allowed.
FBR TAX CARD 2023 FOR PAKISTAN (Finance Act 2023)
For people whose annual "salary income" exceeds 75% of total taxable income:
Annual Salary up to Rs. 600,000 : (Zero 0 %)
Where annual salary is Rs. 600,000 to 1,200,000 : (2.5% of the amount above 600,000)
Rs. 1,200,000 to 2,400,000 : (15,000 + 12.5% of the amount above
1,200,000)
Rs. 2,400,000 to 3,600,000 : (165,000 + 22.5% of the amount above
2,400,000)
Rs. 3,600,000 to 6,000,000 : (435,000 + 27.5% of the amount above
3,600,000)
Rs. 6,000,000 and above : (1,095,000 + 35% of the amount
above 6,000,000)
For all others non-salary individuals like Sole Proprietors and Partnerships / AOPs:
Up to Rs 600,000 - (Zero 0%)
Rs 600,000 to Rs 800,000 : (7.5% of the amount above 600,000)
Rs 800,000 to Rs 1,200,000 : (15,000 + 15% of the amount above
800,000)
Rs 1,200,000 to Rs 2,400,000 : (75,000 + 20% of the amount above
1,200,000)
Rs 2,400,000 to Rs 3,000,000 : (315,000 + 25% of the amount above
2,400,000)
Rs 3,000,000 to Rs 4,000,000 : (465,000 + 30% of the amount above
3,000,000)
Above Rs 4,000,000 : (765,000 + 35% of the amount above
4,000,000)
Still need help? We can help you with taxation. Call us on +92-333-522-3360 or email us. We make sure that our customers always get served quickly and effectively without charging a fortune other lawyers and agents would otherwise charge.
