Income tax is a category of income taxes that all governments collect on the earnings of working persons and companies. The Income Tax Act 2001 defines Pakistan’s present tax system for income tax, which is handled by the Federal Board of Revenue (FBR). This Ordinance requires the federal government to collect this Tax.
Each year, the government has the power to adjust the income levels and income taxes in its Overall Budget. However, for Pakistani taxation, the time from July 1st to June 30th is regarded as the ordinary financial year. So we have got you covered if you’re asking how to estimate income tax on income in Pakistan.
Income tax rates provide money for the state, which is used to support public services, pay public benefits, and give goods to residents. Income is more than just money received as a salary. Rents from financial money such as houses or stores are also included in company earnings, bonuses, investment income, and ‘revenue from other resources.’
Since 2019, the corporation tax rate has been set at 29 percent, whereas the financial industry’s corporation tax rate is 35 percent. Other income taxes that apply include the Super Tax, the Minimal Tax, and the Tax on Unaudited Savings.
According to the Income – Tax act 2001, the money you get each year is divided into the following categories:
- Basic Income
- Allowance for House Rent
- Allowance for Transport
- Allowances for Medical and Other Purposes
How To Calculate Income Tax on Salary 2024
There are two methods to calculate Income Tax on Salary in Pakistan 2023. You can calculate Tax online and by Tax Slabs.
Via Online Method
- Browse the Income Tax Calculator.
- Enter your earnings.
- Choose if you want to enter monthly or annual earnings.
- The results are displayed below, together with the appropriate Tax, income after Tax, exemption amount, and tax slab you belong to.
Via Income Tax Slabs
An Individual’s income is much more than Rs. 600,000/- per year would have a fixed amount taken from their pay under the taxation slabs for Financial Year 2021-22.
Here’s everything you need to understand regarding tax slabs for financial years 2021-22:
| Taxable Income | Income Tax Rate in Pakistan |
|---|---|
| Taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000 | 5% of the amount exceeding Rs. 600,000 |
| Taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,800,000 | Rs. 30,000 plus 10% of the amount exceeding Rs. 1,200,000 |
| Taxable income exceeds Rs. 1,800,000 but does not exceed Rs. 2,500,000 | Rs. 90,000 plus 15% of the amount exceeding Rs. 1,800,000 |
| Taxable income exceeds Rs.2,500,000 but does not exceed Rs. 3,500,000 | Rs. 195,000 plus 17.5% of the amount exceeding Rs. 2,500,000 |
| Taxable income exceeds Rs. 3,500,000 but does not exceed Rs. 5,000,000 | Rs. 370,000 plus 20% of the amount exceeding Rs. 3,500,000 |
| Taxable income exceeds Rs. 5,000,000 but does not exceeds Rs. 8,000,000 | Rs. 670,000 plus 22.5% of the amount exceeding Rs. 5,000,000 |
| Taxable income exceeds Rs. 8,000,000 but does not exceeds Rs. 12,000,000 | Rs. 1,345,000 plus 25% of the amount exceeding Rs. 8,000,000 |
| Taxable income exceeds Rs. 12,000,000 but does not exceeds Rs. 30,000,000 | Rs. 2,345,000 plus 27.5% of the amount exceeding Rs. 12,000,000 |
| Taxable income exceeds Rs. 30,000,000 but does not exceeds Rs. 50,000,000 | Rs. 7,295,000 plus 30% of the amount exceeding Rs. 30,000,000 |
| Taxable income exceeds Rs. 50,000,000 but does not exceeds Rs. 75,000,000 | Rs. 13,295,000 plus 32.5% of the amount exceeding Rs. 50,000,000 |
| Taxable income exceeds Rs. 75,000,000 | Rs. 21,420,000 plus 35% of the amount exceeding Rs. 75,000,000 |
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