Income Tax Rates applicable in Pakistan.

 Following general rates of tax are currently applicable in Pakistan for tax year 2010:

  • Corporate Tax Rate: 0 upto  35% depending on company size and net tax profit
  • In case of loss(Section 113):  0.5% of Turnover (specific exemptions may be available.)
  • Services 6% on professional firms (accountants, Lawyers , Consultants, doctors etc)
  • Technical Services: up to 15 % depending on tax treaty
  • Dividend: up to 10 % depending on tax treaty
  • Payroll Tax: 0% to 20% varies with salary
  • General Sales Tax Rate: 0 upto 16% (depending on exemptions and type of industry
  • Custom Duty: 0 to 25%

 For complete guidance and assistance contact our support team or just leave a message and an M&M representative will get in touch with you.Thankyou.

44 Comments

    1. Masood

      Final Tax Regime Denotes that tax deducted at source is FINAL i.e. No further taxation would occur at the time of filing the return.
      Normal Tax Regime is wherein tax is also deducted at source but the differential may be payable on net income at the time of return filing.
      Yes, Tax on services is 6% however the same is no more final with regards to services of doctors, accountants, and lawyers.

      In case of any further queries you may contact Mr. Hasan Masood, Partner (hasan@masoodandmasood.com) regarding the same.

  1. Imran

    I am an permanent employee with an organization but at the same time teach as a visiting faculty member in universities.

    Universities pay me on hourly basis and deduct 6% from my payments.

    Will my payment from universities come under rendering services or under executing contract?

    As per income tax ordinance, services are restricted to:

    #8213;services#8214; includes the services of accountants, architects,
    dentists, doctors, engineers, interior decorators and lawyers,
    otherwise than as an employee

    If teaching doesnt come under services, then what will be the treatment of my above mentioned income?

  2. SALMAN

    01..I have been Engaged as a visiting lecture for only forth months on hourly basis but maximum remuneration dost not exceed Rs. 16000 more over i have other source of income neither Govt. nor Private
    02… If an educational institution purchases sum items up to Rs. 9999 will the income tax deducted at source and it is liability of institute to pay the income tax @3.5%? The shop doesn’t keep income tax number

  3. Anjum Javed

    Tax % age on followings is

    1- Goods Supplied – 3.5%
    2- Services – 6%

    Kindly confirm that what is the minimum transaction during a financial period on which these tax rates are not applicable.

  4. usmansher

    how would i find out wheather my company in falling under FTR or NTR and would you please also give me refernce of Income Tax Ordinance Reference also.

  5. Muhammad Asghar Khan

    please provide me section where I could be abel to see the rate of deduction at source from a Joint venture in which local firm is a lead firm.

  6. Bilal Rao

    Respected sir i am student of PIPFA in final level also have done my graduation in Commerce from Punjab university Lahore, sir i want to know about general sale tax rates playable in Pakistan, about all items like stationery, utility. I’ll very great full to you.

    Thanking You

  7. Nabeel Sarfaraz

    Hello sir i have Software Firm in Peshawar and i have some questions if you please help me

    1. I know that under the section 133 of ITO 2001 Export of computer software is exemted from incom tax, is it true for wokring with local clients in Paksitan ?

    2. If i obtain NTN for my firm having 4 partners so i have to pay double tax, first on Firm net income and 2nd on pertners shares on that income ?

    3. if work for local client and it charge me 6% serivce tax should i again have to pay income tax on that payment ?

  8. imran

    Sir my monthly income is 15000. that mean my yearly salary is 180000. Do I have to pay income tax . if yes then wat is the percentage 5 % or any other rate

  9. Patty Salce

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  10. Omais

    Can I have the details of the income tax applicable on a retail outlet?

    At what amount of profit does the tax starts – I mean till what amount of sales / profits is the business exempted??

    Please also specify the income tax rate on different profit brackets – or is there a fixed rate on profits for retailers??

  11. Zaheer Miyan

    after 15-years experiencing in Computer Services as Employee i am considering to Start an Registered IT Services Provider Company please guide me in respect of Taxes Applicable on IT Services and difference between “Sole Proprietorship” AND “Company (smc) Private Limited”.

    Thanksk & Regards;
    Zaheer Miyan
    Cell#: 03218464540
    Lahore, Pakistan.

  12. Salman

    I am a supplier of corn cob and rice husk (solid fuel) to various industries to be burned inside the boilers. The payment I receive for my product is always net of 3.5% WHT. Kindly tell me if this falls in final tax regime or do I have to pay some more money as tax in normal tax regime over my product

  13. Muhammad Umair

    Services 6% on professional firms (accountants, Lawyers , Consultants, doctors etc)

    Is it applicable on free lancer(Individual) who provides software development service?

    if yes so please tell the section under which the tax will be filed?

    1. Masood

      Section 153 would apply subject to any exemption in the schedules and Section 114 read with Section 115(4) and Section 116 would be attracted when filing returns. All information relates to Income Tax Ordinance, 2001

  14. Muhammad Zubair

    Kindly comments on it,,, as per 6th schedule of sales tax act; in case of taxable supplies turnover is below five million rupees exempted from registration and payment of sales tax. In this case, exemption is still available for unregistered persons whose taxable supplies turnover is below five million after new amendment in Sales Tax Special Procedure (Withholding) Rules, 2007 [as per SRO 505(/)/2013: To expand scope of withholding regime by making all withholding agents responsible to withhold whole of sales tax on purchases from unregistered persons].

  15. Muhammad Younis

    I work for a consultancy firm which is paying its tax/is deducted from the source. We have just got a consultancy for an NGO where they have already deducted the tax @6%. Now my question is that they are telling me that as I was part of that consultancy from my share they will be deducting the tax @ 6%. Is it legal or is it ok for them to pay the tax twice means at the source and from the income of their consultants.

  16. Hamza Waqas

    Good day,

    1). I’m Software Engineering contractor who is working for an organization in Pakistan on the contract basis. There is no commitment of full time so whatever I got in payment every month is proportional to the work I’ve done in the whole month. Can you please tell me either I’m in tax or not and if I’ve to pay tax, then what would be the range?

    2). On the hourly basis, I do part time / freelancing contracts with the various organizations over the world. E.g, I’m working on good hourly rate with an organization in Italy & US and they pay me out via Western Union. Do you think I’ve to pay on this remittance that I’m making out from abroad?

    Looking to hear back.

    Regards,
    – Waqas

  17. anwar

    i am working as technical consultant in an IT company. Please share if consultants are exempted from income taxe. if not what are the tax rates for consultants?

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