Understanding Pakistan's Tax Year
Pakistan's tax year runs from 1 July to 30 June. FY 2025-26 means the year from July 1, 2025 to June 30, 2026 — also called Tax Year 2026 on FBR's IRIS portal. Income earned in this period is taxed at the rates below and must be declared in your annual return, due by September 30, 2026.
Tip: The slabs below apply to declared income. Withholding tax already deducted from your salary or bank transactions counts as advance tax and is offset against your final liability.
Salaried Individuals — Income Tax Slabs 2025-26
These rates apply to persons whose salary income is at least 75% of their total income. If you earn from both salary and business, your classification may differ — consult a tax professional.
| Annual Taxable Income (Rs.) | Tax Rate | Tax on Excess |
|---|---|---|
| Up to Rs. 600,000 | 0% | Nil |
| Rs. 600,001 – Rs. 1,200,000 | 5% | On amount exceeding Rs. 600,000 |
| Rs. 1,200,001 – Rs. 2,200,000 | 15% | Rs. 30,000 + 15% on amount exceeding Rs. 1,200,000 |
| Rs. 2,200,001 – Rs. 3,200,000 | 25% | Rs. 180,000 + 25% on amount exceeding Rs. 2,200,000 |
| Rs. 3,200,001 – Rs. 4,100,000 | 30% | Rs. 430,000 + 30% on amount exceeding Rs. 3,200,000 |
| Above Rs. 4,100,000 | 35% | Rs. 700,000 + 35% on amount exceeding Rs. 4,100,000 |
Worked Example — Salaried
Monthly salary: Rs. 150,000 → Annual salary: Rs. 1,800,000
- First Rs. 600,000 → 0% = Rs. 0
- Next Rs. 600,000 (Rs. 600,001–1,200,000) → 5% = Rs. 30,000
- Remaining Rs. 600,000 (Rs. 1,200,001–1,800,000) → 15% = Rs. 90,000
- Total annual tax: Rs. 120,000 (Rs. 10,000/month)
Try Our Free Tax Calculator
Enter your salary and get your exact tax liability instantly — with year-on-year comparison.
Open Tax Calculator →Business / Self-Employment Income Tax Slabs 2025-26
These rates apply to sole proprietors, freelancers with business income, and individuals whose salary income is less than 75% of total income.
| Annual Taxable Income (Rs.) | Tax Rate |
|---|---|
| Up to Rs. 600,000 | 0% |
| Rs. 600,001 – Rs. 1,200,000 | 15% |
| Rs. 1,200,001 – Rs. 1,600,000 | 20% |
| Rs. 1,600,001 – Rs. 3,200,000 | 30% |
| Rs. 3,200,001 – Rs. 5,600,000 | 40% |
| Above Rs. 5,600,000 | 45% |
⚠️ Note for Freelancers: IT freelancers and exporters receiving foreign remittances may qualify for reduced final tax rates (1% on export proceeds) under the IT Policy and FBR SROs. These are separate from the standard slab rates above. Consult EmpowerTech Innovations to ensure you're filing under the correct category.
AOP (Association of Persons) Tax Rates 2025-26
AOPs — partnerships, joint ventures, and Hindu Undivided Families — are taxed as a separate entity. The AOP pays tax at the business individual slab rates above, and then the individual partners are exempt on their share of AOP profit (to avoid double taxation).
Company Tax Rates 2025-26
| Company Type | Tax Rate |
|---|---|
| Small Company (turnover up to Rs. 250 million, meets all conditions) | 20% |
| Banking Company | 39% |
| Other Private / Public Company | 29% |
Key Tax Deductions You Should Know
Certain payments reduce your taxable income and thus your tax bill. These are called deductible allowances:
- Zakat paid under the Zakat and Ushr Ordinance — fully deductible
- Profit on debt (home loan interest) — deductible up to Rs. 2 million for first home buyers
- Contributions to approved pension fund — deductible up to 20% of taxable income
- Charitable donations to approved institutions — deductible up to 30% of taxable income
- Educational expenses for children — limited deduction available
Filer vs. Non-Filer Withholding Tax — The Real Cost of Not Filing
Even if your income falls in the zero-tax slab, not filing costs you money through higher withholding rates on everyday transactions:
| Transaction Type | Filer Rate | Non-Filer Rate |
|---|---|---|
| Cash withdrawal above Rs. 50,000/day from bank | 0% | 0.6% |
| Dividend income | 15% | 30% |
| Property sale (by seller) | 3% | 6% |
| Property purchase (by buyer) | 3% | 10.5% |
| Vehicle registration (1300cc+) | Filer rate | +100% surcharge |
Confused About Your Tax Slab or Category?
Our tax consultants will assess your income sources, identify the right slab, and file your return accurately — maximizing legitimate deductions.
Get a Free Consultation