Pakistan Budget 2026-27: Key Tax Expectations & How to Prepare Now

Pakistan's tax year runs from July 1st to June 30th. The budget for Fiscal Year (FY) 2024-25 was presented in June 2024, setting the current tax laws. While FY 2025-26 details remain speculative until the budget announcement in June 2025, you can find precise calculations for current tax liabilities using an online tax calculator like the one available at https://taxwizard.pk/#calculator.

Here are the updated income tax slabs for various categories, effective for FY 2024-25 (as per Finance Act 2024, where applicable):

Salaried Individuals Income Tax Slabs FY 2024-25 (as per Finance Act 2024 - slabs restructured):

• Up to Rs. 600,000: 0% (Nil tax)
• Rs. 600,001 to Rs. 1,200,000: 5% of the amount exceeding Rs. 600,000
• Rs. 1,200,001 to Rs. 2,200,000: Rs. 30,000 + 15% of the amount exceeding Rs. 1,200,000
• Rs. 2,200,001 to Rs. 3,600,000: Rs. 180,000 + 20% of the amount exceeding Rs. 2,200,000
• Rs. 3,600,001 to Rs. 6,000,000: Rs. 460,000 + 27.5% of the amount exceeding Rs. 3,600,000
• Above Rs. 6,000,000: Rs. 1,120,000 + 35% of the amount exceeding Rs. 6,000,000

For a quick assessment of your salaried income tax, visit https://taxwizard.pk/#calculator.

Association of Persons (AOPs) and Companies (Non-Salaried/Business Income) Income Tax Slabs FY 2024-25 (as per Finance Act 2024):

• Up to Rs. 400,000: 0% (Nil tax)
• Rs. 400,001 to Rs. 600,000: 2.5% of the amount exceeding Rs. 400,000
• Rs. 600,001 to Rs. 1,200,000: Rs. 5,000 + 7.5% of the amount exceeding Rs. 600,000
• Rs. 1,200,001 to Rs. 2,400,000: Rs. 50,000 + 15% of the amount exceeding Rs. 1,200,000
• Rs. 2,400,001 to Rs. 3,000,000: Rs. 230,000 + 20% of the amount exceeding Rs. 2,400,000
• Rs. 3,000,001 to Rs. 4,000,000: Rs. 350,000 + 25% of the amount exceeding Rs. 3,000,000
• Rs. 4,000,001 to Rs. 5,600,000: Rs.

600,000 + 30% of the amount exceeding Rs. 4,000,000

• Above Rs. 5,600,000: Rs. 1,080,000 + 45% of the amount exceeding Rs. 5,600,000

Company Tax Rates:

• The standard corporate tax rate for banking companies is 39% (base tax). Additionally, banking companies with income exceeding PKR 300 million are subject to a 10% super tax, leading to an approximate 49% effective rate. For other companies, it's generally 29% for most listed and unlisted companies, with some exceptions for small and medium enterprises (SMEs) and specific sectors. Companies operating in the petroleum sector or certain other specified sectors may have different rates.

Capital Gains Tax (CGT) on Immovable Property (FY 2024-25): CGT on immovable property varies based on holding period and filer/non-filer status.

• For properties acquired on or after July 1, 2022:

  • Filer (Active Taxpayer List):
    • Up to 1 year: 15% of gain
    • 1-2 years: 12.5% of gain
    • 2-3 years: 10% of gain
    • 3-4 years: 7.5% of gain
    • 4-5 years: 5% of gain
    • 5-6 years: 2.5% of gain
    • Above 6 years: 0% of gain (though some proposals have sought to remove this nil category for certain properties).
  • Non-Filer: Higher rates, typically 2.5 times the filer rates for equivalent periods.

• For properties acquired on or after July 1, 2024:

  • ATL Filer: Flat 15% of gain.
  • Non-ATL Filer: Progressive rates starting with a minimum of 15% and potentially reaching up to 45% of gain, based on the property value and holding period.

CGT on Shares/Securities (FY 2024-25):

• Listed Securities:
  • Less than 12 months: 15%
  • 12 months or more: 12.5%
  • This applies to income from capital gains on the sale of shares of a public company, NIT units, or units of a collective investment scheme.

Sales Tax (Federal) FY 2024-25:

• The standard rate of Federal Sales Tax is 18%.
• Specific goods may have higher or lower rates, and certain essential goods, services, and zero-rated exports are exempt or taxed at 0%.

Filing Deadlines (General):

• Salaried Individuals: September 30th (for the tax year ending June 30th)
• Businesses (Sole Proprietors, AOPs): September 30th (for the tax year ending June 30th), or December 31st for those with special accounting periods.
• Companies: December 31st (for the tax year ending June 30th), or six months after the close of the accounting period for those with special accounting periods.
• Sales Tax Returns: 15th of every month for the preceding tax period.
• Withholding Tax Statements: Vary, typically by 15th-20th of the following month.

Always stay updated with the latest FBR notifications to avoid penalties. For precise calculations, use tools like the one at https://taxwizard.pk/#calculator.

FBR Regulations & Compliance: The Federal Board of Revenue (FBR) regularly issues SROs (Statutory Regulatory Orders) and circulars to clarify or amend tax laws. Recent emphasis has been on broadening the tax net, digitization, and curbing tax evasion. Mandatory registration for retailers and integration with FBR POS systems, enhanced data analytics for identifying non-filers, and increased scrutiny on large transactions are ongoing efforts.

Penalty Structures: Penalties for non-compliance are severe and include:

• Late Filing: Penalties can be 0.1% of the tax payable or Rs. 1,000 per day (whichever is higher), with a minimum penalty ranging from Rs. 5,000 to Rs. 50,000 depending on the taxpayer type (salaried, AOP, company) and the duration of delay. The maximum penalty can be up to 25% of the tax payable.

Default surcharge on unpaid tax also applies.

• Non-Filing: Non-filers face higher withholding tax rates, restriction on certain transactions (e.g., purchasing new vehicles, property over a certain value), and potential legal action.
• Concealment of Income/Misstatement: Penalties can be up to 100% of the tax evaded, along with default surcharge and prosecution.

Recent Changes/Updates: The FBR is continuously working on digitizing processes, integrating data sources, and simplifying tax procedures. There's a strong push for bringing unregistered persons into the tax net and increasing tax revenue, often through increased withholding taxes and stricter enforcement. The Finance Act 2024 (for FY 2024-25) introduced various changes, including adjustments to certain withholding tax rates, significant changes in income tax calculations for certain segments, and continued emphasis on broadening the tax base. Specific details for FY 2025-26 would be introduced in the upcoming budget in June 2025. However, the general direction towards increased revenue mobilization and compliance is consistent. For personalized tax advice and up-to-date calculations, remember to check https://taxwizard.pk/#calculator.