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Tax Rates

Taxation in Pakistan

Pakistan Tax rates for the year 2020 on different business structures

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 Provincial 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 Rates on Sole proprietorship Business 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 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 September 30, 2020.
    Tax Brackets:
  • Income up to Rs 400,000 – (Zero 0%)
  • Rs 400,001 to Rs 600,000 : (5% of the amount above 400,000)
  • Rs 600,001 to Rs 1,200,000 : (10,000 + 10% of the amount above 600,000)
  • Rs 1,200,001 to Rs 2,400,000 : (70,000 + 15% of the amount above 1,200,000)
  • Rs 2,400,001 to Rs 3,000,000 : (250,000 + 20% of the amount above 2,400,000)
  • Rs 3,000,001 to Rs 4,000,000 : (370,000 + 25% of the amount above 3,000,000)
  • Rs 4,000,001 to Rs 6,000,000 : (620,000 + 30% of the amount above 4,000,000)
  • Above Rs 6,000,000 : (1,220,000 + 35% of the amount above 6,000,000).

Tax Rates 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 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 September 30, 2020.
    Tax Brackets:
  • Income up to Rs 400,000 – (Zero 0%)
  • Rs 400,001 to Rs 600,000 : (5% of the amount above 400,000)
  • Rs 600,001 to Rs 1,200,000 : (10,000 + 10% of the amount above 600,000)
  • Rs 1,200,001 to Rs 2,400,000 : (70,000 + 15% of the amount above 1,200,000)
  • Rs 2,400,001 to Rs 3,000,000 : (250,000 + 20% of the amount above 2,400,000)
  • Rs 3,000,001 to Rs 4,000,000 : (370,000 + 25% of the amount above 3,000,000)
  • Rs 4,000,001 to Rs 6,000,000 : (620,000 + 30% of the amount above 4,000,000)
  • Above Rs 6,000,000 : (1,220,000 + 35% of the amount above 6,000,000).

Tax Rates on Limited Liability Partnerships (LLP) in Pakistan

  • NTN is issued in name of the LLP.
  • 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 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 submitted by 30th September 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 September 30, 2020.
    Tax Brackets:
  • Income up to Rs 400,000 – (Zero 0%)
  • Rs 400,001 to Rs 600,000 : (5% of the amount above 400,000)
  • Rs 600,001 to Rs 1,200,000 : (10,000 + 10% of the amount above 600,000)
  • Rs 1,200,001 to Rs 2,400,000 : (70,000 + 15% of the amount above 1,200,000)
  • Rs 2,400,001 to Rs 3,000,000 : (250,000 + 20% of the amount above 2,400,000)
  • Rs 3,000,001 to Rs 4,000,000 : (370,000 + 25% of the amount above 3,000,000)
  • Rs 4,000,001 to Rs 6,000,000 : (620,000 + 30% of the amount above 4,000,000)
  • Above Rs 6,000,000 : (1,220,000 + 35% of the amount above 6,000,000)

Tax Rates 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.
  • Taxed for the profits at the following rates:
    a) Small Company 23% (will decrease by 1% every year to 20% by the year 2023).
    b) Other than small company 29% (will decrease by 1% every year to 25% by the year 2023).
    c) Minimum Turnover Tax of 1.5% .

Tax Rates 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 2020 FOR PAKISTAN (Finance Act 2019)

For people whose annual “salary income” exceeds 75% of total taxable income:

  • Annual Salary up to Rs 600,000 : (Zero 0 %)
  • Rs. 600,001 to 1,200,000 : (5% of the amount above 600,000)
  • Rs 1,200,001 to 1,800,000 : (30,000 + 10% of the amount above 1,200,000)
  • Rs 1,800,001 to 2,500,000 : (90,000 + 15% of the amount above 1,800,000)
  • Rs 2,500,001 to 3,500,000 : (195,000 + 17.5% of the amount above 2,500,000)
  • Rs 3,500,001 to 5,000,000 : (370,000 + 20% of the amount above 3,500,000)
  • Rs 5,000,001 to 8,000,000 : (670,000 + 22.5% of the amount above 5,000,000)
  • Rs 8,000,001 to 12,000,000 : (1,345,000 + 25% of the amount above 8,000,000 )
  • Rs 12,000,001 to 30,000,000 : (2,345,000 + 27.5% of the amount above 12,000,000)
  • Rs 30,000,001 to 50,000,000 : (7,295,000 + 30% of the amount above 30,000,000)
  • Rs 50,000,001 to 75,000,000 : (13,295,000 + 32.5% of the amount above 50,000,000)
  • Above Rs 75,000,000 : (21,420,000 + 35% of the amount above 75,000,000 )

For all others non-salary individuals like Sole Proprietors and Partnerships / AOPs:

  • Up to Rs 400,000 – (Zero 0%)
  • Rs 400,001 to Rs 600,000 : (5% of the amount above 400,000)
  • Rs 600,001 to Rs 1,200,000 : (10,000 + 10% of the amount above 600,000)
  • Rs 1,200,001 to Rs 2,400,000 : (70,000 + 15% of the amount above 1,200,000)
  • Rs 2,400,001 to Rs 3,000,000 : (250,000 + 20% of the amount above 2,400,000)
  • Rs 3,000,001 to Rs 4,000,000 : (370,000 + 25% of the amount above 3,000,000)
  • Rs 4,000,001 to Rs 6,000,000 : (620,000 + 30% of the amount above 4,000,000)
  • Above Rs 6,000,000 : (1,220,000 + 35% of the amount above 6,000,000)
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