Understand Pakistan
Tax Laws Simply

Visit www.fbr.gov.pk and search the ATL section, or send your CNIC number (without dashes) as an SMS to 9966. You will receive an instant reply. The ATL is updated every Monday by FBR.

For salaried individuals and AOPs, the return filing deadline is September 30 of each year for the tax year ending June 30. Late filing attracts a penalty of Rs. 1,000 under Section 182 of the Income Tax Ordinance, 2001.

A minimum penalty of Rs. 1,000 applies under Section 182. However the bigger cost is losing filer status — non-filers pay double withholding tax on property, bank profits, dividends, and card payments — costing hundreds of thousands of rupees annually.

Under Section 236C, advance tax on property sale is: Filer = 4.5%, Late Filer = 7.5%, Non-Filer = 11.5%. On a Rs. 10 million sale, a filer pays Rs. 450,000 while a non-filer pays Rs. 1,150,000 — saving Rs. 700,000 by being a filer.

Under Section 236K, advance tax on property purchase is: Filer = 1.5%, Late Filer = 4.5%, Non-Filer = 10.5%. On a Rs. 10 million purchase, a filer pays Rs. 150,000 while a non-filer pays Rs. 1,050,000 — a saving of Rs. 900,000.

Section 7E treats property as generating deemed income of 5% of its fair market value and taxes it. However, 9 categories are exempt including: persons owning only one property, self-used business premises (filers), agricultural land, Shaheed family properties, rented properties with tax paid, and all properties with aggregate FBR value below Rs. 25 million.

Salary tax slabs for 2025-26:
Up to Rs. 600,000 = 0%
Rs. 600,001 – 1,200,000 = 1% of amount exceeding Rs. 600,000
Rs. 1,200,001 – 2,200,000 = Rs. 6,000 + 11%
Rs. 2,200,001 – 3,200,000 = Rs. 116,000 + 23%
Rs. 3,200,001 – 4,100,000 = Rs. 346,000 + 30%
Above Rs. 4,100,000 = Rs. 616,000 + 35%

Yes. Cash House Rent Allowance is fully taxable as salary under Section 12 of the ITO 2001. There is no exemption for cash HRA. However, if your employer directly provides accommodation (a perquisite), it is valued at 45% of basic salary or actual rent — whichever is lower.

Under Section 151, banks deduct withholding tax on profit from savings accounts, term deposits, and PLS accounts. Rates: Filer = 20%, Non-Filer = 40%. This tax is adjustable in your annual return. On Rs. 500,000 bank profit, a filer pays Rs. 100,000 while a non-filer pays Rs. 200,000.

Under Section 236Y, banks collect advance tax on international payments via Pakistani credit, debit, and prepaid cards. Rates: Filer = 5%, Non-Filer = 10%. This applies to online shopping, travel bookings, Netflix, Amazon, university fees, and all foreign transactions. Tax is adjustable in annual return.

The standard General Sales Tax (GST) rate is 18% under Section 3 of the Sales Tax Act, 1990. Three types of goods exist: Taxable (18%), Zero-Rated (0% — mainly exports, input tax refundable), and Exempt (Sixth Schedule — no GST, no input tax claim).

Under Section 3(1A), registered persons making taxable supplies to unregistered buyers must charge an additional 4% Further Tax. This makes the total tax rate 22% (18% + 4%). Its purpose is to encourage buyers to register for sales tax.

A filer appears on FBR's Active Taxpayer List (ATL) by filing their annual income tax return. A non-filer has not filed and faces double or higher withholding tax rates on property (11.5% vs 4.5%), bank profits (40% vs 20%), dividends (30% vs 15%), and card payments (10% vs 5%). Filing a return — even a Nil Return — gives full filer status.

Withholding tax is income tax deducted by the payer at the time of making a payment and deposited with FBR on behalf of the recipient. The recipient receives the net amount. At year-end, the withheld amount is credited against the recipient's annual tax liability. Key sections: 149 (salary), 150 (dividends), 151 (bank profit), 236C (property sale), 236K (property purchase).