Pakistan's income tax is governed primarily by the Income Tax Ordinance, 2001, as amended by the Finance Act, 2026. The current normal tax year is 1 July 2026 to 30 June 2027 (Tax Year 2027). Different schedules apply to salaried individuals, non-salaried individuals, associations of persons and companies.
Salaried individual income tax slabs - FY 2026-27
Under Division I, Part I of the First Schedule, the salaried table generally applies where salary income exceeds 75% of taxable income. Tax is calculated by adding the fixed amount to the stated percentage of income above the lower limit of the relevant band.
| Annual taxable income (PKR) | Tax calculation |
|---|---|
| Up to 600,000 | Nil |
| 600,001 - 1,200,000 | 1% of amount above 600,000 |
| 1,200,001 - 2,200,000 | 6,000 + 11% above 1,200,000 |
| 2,200,001 - 3,200,000 | 116,000 + 20% above 2,200,000 |
| 3,200,001 - 4,100,000 | 316,000 + 25% above 3,200,000 |
| 4,100,001 - 5,600,000 | 541,000 + 29% above 4,100,000 |
| 5,600,001 - 7,000,000 | 976,000 + 32% above 5,600,000 |
| Above 7,000,000 | 1,424,000 + 35% above 7,000,000 |
The Finance Act 2026 introduced intermediate bands above PKR 4.1 million, raised the threshold for the top 35% rate to PKR 7 million and removed the former surcharge on high salaried income. Employers generally deduct salary tax under section 149.
Self-employed and business income tax - FY 2026-27
Non-salaried individuals and associations of persons (AOPs) generally use the non-salaried table in Division I, Part I of the First Schedule. The taxable base is determined after applicable business deductions and allowances; special regimes, minimum tax and super tax may alter the outcome.
| Annual taxable income (PKR) | Tax calculation |
|---|---|
| Up to 600,000 | Nil |
| 600,001 - 1,200,000 | 15% above 600,000 |
| 1,200,001 - 1,600,000 | 90,000 + 20% above 1,200,000 |
| 1,600,001 - 3,200,000 | 170,000 + 30% above 1,600,000 |
| 3,200,001 - 5,600,000 | 650,000 + 40% above 3,200,000 |
| Above 5,600,000 | 1,610,000 + 45% above 5,600,000 |
Section 18 covers income from business; sections 20-22 deal with general deductions, exclusions and depreciation. An AOP is a separately recognized taxpayer for income tax purposes.
Company income tax in Pakistan
Under section 18 and the First Schedule, companies are subject to tax on taxable business income. For the standard categories, the generally applicable rates are 29% for companies other than banking companies, 39% for banking companies and 20% for qualifying small companies, subject to statutory classification, sector-specific rules and amendments. A small company is defined under section 2(59A), with eligibility conditions; it is not determined by turnover alone.
Companies may also be subject to minimum tax under section 113, alternative corporate tax under section 113C and super tax under section 4C, where applicable. The Finance Act 2026 changed super-tax thresholds and rates, including general relief for income up to PKR 500 million, with exceptions for certain sectors. Consult the amended legislation for the relevant tax year and sector.
Senior citizens, teachers, researchers and other reliefs
The historical article described concessions for senior citizens, persons with disabilities, teachers and researchers. Such relief is not automatic and must be checked against the current Second Schedule and relevant tax-credit provisions. For example, the Finance Act 2025 addressed the rebate for eligible full-time teachers and researchers for specified earlier tax years. Eligibility, limits and effective dates must be verified before claiming any credit or reduction.
Tax residency, taxable income and filing
Section 82 sets out individual tax residency rules, including the general 183-day presence test, subject to other statutory conditions. Section 11 identifies heads of income: salary, property, business, capital gains and other sources. Section 9 defines taxable income by reference to total income and permitted deductions. Section 114 addresses return-filing obligations, and section 116 concerns wealth statements in applicable cases.
Resident and non-resident taxpayers can face different source and scope rules. For up-to-date procedures, see the FBR income tax basics and the Federal Board of Revenue.
Capital gains and withholding tax
Section 37 generally addresses gains from disposal of capital assets, while section 37A concerns securities. Rates depend on asset type, acquisition date, holding period, filer status and other statutory factors. The Finance Act 2026 also changed advance-tax rules for property transactions under sections 236C and 236K. Withholding tax on payments such as salaries, contracts and dividends is governed by the applicable sections and schedules, and should be checked against the current FBR withholding tax rate card.
Historical Pakistan income tax rates - FY 2017-18
Archived information from the original article for the year 1 July 2017 to 30 June 2018. These tables reflect the uploaded source and are not current-year tax guidance. Historical thresholds and concessions should be checked against the relevant Finance Act before use in an assessment.
2017-18 salaried individual tax bands (historical)
| Taxable Income Slab | Tax Rate |
| Upto Rs. 4,00,000 | 0% |
| Rs. 4,00,001 to Rs. 5,00,000 | 2% |
| Rs. 5,00,001 to Rs. 7,50,000 | 5% |
| Rs. 7,50,001 to Rs. 14,00,000 | 10% |
| Rs. 14,00,001 to Rs. 15,00,000 | 12.5% |
| Rs. 15,00,001 to Rs. 18,00,000 | 15% |
| Rs. 18,00,001 to Rs. 25,00,000 | 17.5% |
| Rs. 25,00,001 to Rs. 30,00,000 | 20% |
| Rs. 30,00,001 to Rs. 35,00,000 | 22.5% |
| Rs. 35,00,001 to Rs. 40,00,000 | 25% |
| Rs. 40,00,001 to Rs. 70,00,000 | 27.5% |
| Rs. 70,00,001 and above | 30% |
2017-18 self-employed individual tax bands (historical)
| Taxable Income Slab | Tax Rate |
| Upto Rs. 4,00,000 | 0% |
| Rs. 4,00,001 to Rs. 5,00,000 | 7% |
| Rs. 5,00,001 to Rs. 7,50,000 | 10% |
| Rs. 7,50,001 to Rs. 15,00,000 | 15% |
| Rs. 15,00,001 to Rs. 25,00,000 | 20% |
| Rs. 25,00,001 to Rs. 40,00,000 | 25% |
| Rs. 40,00,001 to Rs. 60,00,000 | 30% |
| Rs. 60,00,001 and above | 35% |
2017-18 company income tax rates (historical)
| Description | Tax Rate |
| Companies / Corporate Tax Rate | 31% |
| Banking Company | 35% |
| Small Company defined under Section 2 | 25% |
Historical concessions mentioned in the original article included reductions for certain senior citizens or disabled taxpayers with taxable income not exceeding PKR 1 million, and a teacher or researcher concession for specified educational and research institutions. These were conditional provisions and should not be treated as current entitlements.
Official legislation and guidance
- Income Tax Ordinance, 2001 - updated consolidated editions (FBR)
- Finance Acts, including Finance Act 2026 and historical Finance Act 2017-18 (FBR)
- Finance Act 2026 - Federal Budget 2026-27 (FBR)
- Federal Budget 2026-27 salient tax measures (FBR)
- Official withholding tax rate cards (FBR)
- Income Tax Rules, 2002 (FBR)
Last reviewed: 23 October 2026. This article is general tax information; the amended law, FBR notifications and taxpayer circumstances control the final liability.