Tax Compliance Requirements for Individuals in Pakistan

All individuals in Pakistan are required to file an Annual Tax Return of their financial activities and situation by the end of September every year, if they meet certain conditions including criteria of income and assets. All non-resident Pakistanis are also required to file the Return, if they meet certain conditions.

And why should people file a Return? There are three good reasons:

  1. Filers are saved from FBR penalties
  2. Filers are saved from 100% extra withholding tax rates across numerous categories
  3. It’s an act of good citizenship!

The basic criteria for the requirement of filing of Income Tax Return for individuals are any one of the following:

  • Has obtained National Tax Number
  • Having a minimum taxable salary of PKR 600,000 per annum
  • In case of non-salaried person, having a minimum taxable income of PKR 400,000, from business or other heads of income
  • Having any real estate property exceeding specified area, located in specified locations, registered in their name
  • Having a motor vehicle (1000 CC or more) registered in their name

In Pakistan, income is taxed based on its source or type. The income can be taxed under the following regimes:

  1. Final Tax Regime (FTR). Some income categories are classified as FTR and there are fixed rates for income tax within each category. Any tax on such income is considered final and such income is not added to the income pool for the other regimes. Examples of FTR categories are dividends, income on saving schemes to name a few.
  2. Minimum Tax Regime (MTR). In this regime a minimum tax is charged if the tax liability under NTR is lesser of tax deducted at source.
  3. Normal Tax Regime (NTR). Under this regime, tax is payable on net income basis i.e. (Income less deductible expenses). Tax rate is applied based on the slabs of income (listed below).
  4. Separate Block of Income. Certain types of incomes are subject to specified tax rates and are kept separate from incomes under other regimes.
  5. Exempt Income. Certain types of incomes are exempt from income tax according to the law. 

If a person’s salary income is 75% or more of the total NTR income, then the salary tax slabs are applicable otherwise the business tax slabs are applicable.

Salary Tax Slabs:

Annual Salary Income between

Fixed Amount

Percentage on Amount Above

PKR 0 and 600,000



PKR 600,000 and 1,200,000


5.00% above PKR 600,000

PKR 1,200,000 and 1,800,000

PKR 30,000

10.00% above PKR 1,200,000

PKR 1,800,000 and 2,500,000

PKR 90,000

15.00% above PKR 1,800,000

PKR 2,500,000 and 3,500,000

PKR 195,000

17.50% above PKR 2,500,000

PKR 3,500,000 and 5,000,000

PKR 370,000

20.00% above PKR 3,500,000

PKR 5,000,000 and 8,000,000

PKR 670,000

22.50% above PKR 5,000,000

PKR 8,000,000 and 12,000,000

PKR 1,345,000

25.00% above PKR 8,000,000

PKR 12,000,000 and 30,000,000

PKR 2,345,000

27.50% above PKR 12,000,000

PKR 30,000,000 and 50,000,000

PKR 7,295,000

30.00% above PKR 30,000,000

PKR 50,000,000 and 75,000,000

PKR 13,295,000

32.50% above PKR 50,000,000

Above PKR 75,000,000

PKR 21,420,000

35.00% above PKR 75,000,000

Business Tax Slabs:

Annual Salary Income between

Fixed Amount

Percentage on Amount Above

PKR 0 and 400,000



PKR 400,000 and 600,000


5.00% above PKR 400,000

PKR 600,000 and 1,200,000

PKR 10,000

10.00% above PKR 600,000

PKR 1,200,000 and 2,400,000

PKR 70,000

15.00% above PKR 1,200,000

PKR 2,400,000 and 3,000,000

PKR 250,000

20.00% above PKR 2,400,000

PKR 3,000,000 and 4,000,000

PKR 370,000

25.00% above PKR 3,000,000

PKR 4,000,000 and 6,000,000

PKR 620,000

30.00% above PKR 4,000,000

Above PKR 6,000,000

PKR 1,220,000

35.00% above PKR 6,000,000


Every individual is also entitled to certain tax credits and deductible allowances i.e. an allowance that is deductible from total income before computing tax liability, both of which effectively reduce the tax liability; however, they are only applicable on the NTR income categories.

For example: Subject to fulfillment of certain criteria and conditions, a person can get tax credits in the following situations:

  1. Foreign tax credit
  2. Tax credit on charitable donations.
  3. Tax credit for investment in shares and insurance.
  4. Tax credit for investment in health insurance.
  5. Tax credit for contribution to an approved pension fund.
  6. Tax credit for employment generation by manufacturers.
  7. Tax credit for point of sale machine
  8. Tax credit for investment
  9. Tax credit for enlistment
  10. Tax credit for certain business activities
  11. Tax credit for specified industrial undertakings 

Apart from tax credits, a person can claim following deductible allowances, subject to fulfilling certain criteria and conditions:

  1. Zakat (deducted by authorized institution)
  2. Workers’ Welfare Fund
  3. Workers’ Participation Fund
  4. Deductible allowance for profit on debt
  5. Deductible allowance for education expenses 

After the end of the tax year, the tax liability is calculated based on all types of income, reduced by deductible allowances and tax credits applied. All withholdings and advance tax paid during the year are deducted from the tax liability and any amount left over is payable. If the amount is negative then a refund is due from the Government. 

Digital Tax Services has created a user friendly and simple online portal for filing of tax returns available at It accurately calculates the amount payable or the refund due, and then all the information is sent to the FBR system for filing of the return. 

Thanks to Faraz Qahir our COO, who has helped me in finalizing this post.

The above article is for general advice and guidance and should not be considered as legal advice. Please contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. for advice.

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