Here you may find information about tax law and lawyers in Pakistan. Our dedicated team of professional lawyers and consultants best assists their clients in understanding the tax law of Pakistan. Virtually every business decision today has tax consequences. You deserve the most practical, tuned-in and well-crafted tax solutions. We provide a comprehensive range of services from the completion of tax returns under corporation tax, self assessment to complex consultancy assignments and strategic tax planning.

Our ability to focus on our clients and deliver innovative tax solutions is enhanced by our knowledge of specific business environments including financial services, leisure, retail, sport, high growth companies, manufacturing and automotive, technology and communications, public sector, property and utilities. We also have a number of specialist tax groups who deal with specific complex areas of tax law. Our consultants can help you plan, grow and structure your business. We are known for our straightforward approach to solving our clients’ most complex business challenges. We work hand-in-hand with clients to improve the business performance, drive shareholder value and create the competitive advantage.

Our Services include:

  • Corporate and individual tax planning including of Trusts, Cooperative Societies and NGOs.

  • Compliance services including preparation of income tax and sales tax returns and Customs clearance.

  • Representing clients before tax authorities and assisting in preparing appeals to the Tribunals, High Courts and Supreme Court.

  • International Tax Consultancy including tax on international transactions and advising on double taxation treaties.

  • Assisting with sales tax matters including registration, de-registration and assessment.

  • Obtaining Advance Ruling on proposed investments or business transactions.

  • Establishing gratuity funds, provident funds and other employees benefit schemes and their approval from tax authorities.

  • Providing general tax advice based on current and evolving laws and rulings.

Tax Law System In Pakistan

Federal taxes in Pakistan like most of the taxation systems in the world are classified into two broad categories, viz., direct and indirect taxes. A broad description regarding the nature of administration of these taxes is explained below:

Direct Taxes

Direct taxes primarily comprise income tax. For the purpose of the charge of tax and the computation of total income, all income is classified under the following heads:

  • Salaries
  • Interest on Securities
  • Income from Property
  • Income from Business or Profession
  • Capital Gains
  • Income from Other Sources

Personal Tax

All individuals, unregistered firms, associations of persons, etc., are liable to tax, at the rates ranging from 10 to 35 per cent.

Tax on Companies

All public companies (other than banking companies) incorporated in Pakistan are assessed for tax at corporate rate of 35%. However, the effective rate is likely to differ on account of allowances and exemptions related to industry, location, exports, etc.

Wealth Statement u/Sec. 116

Wealth Statement u/Sec. 116 is compulsory, where declared income is Rs. 500,000/- or more.

Tax u/Sec. 153(8A) (omitted)

Now, where NTN/CNIC is not available, the excess tax @ 2% shall not be collected.

Inter-Corporate Dividend Tax

Tax on the dividends received by a public company from a Pakistan company is payable at the rate of 5% and at the rate of 15% in case dividends are received by a foreign company. Inter-corporate dividends declared or distributed by power generation companies is subject to reduced rate of tax i.e. 7.5%. Other companies are taxed at the rate of 20%. Dividends paid to all non-company shareholders by the companies are subject to with holding tax of 10% which is treated as a full and final discharge of tax liability in respect of this source of income.

Treatment of Dividend Income

Dividend income received as below, enjoys tax exemption, provided it does not exceed Rs. 10,000/-.

  • Dividend received by non-resident from the state enterprises Mutual Fund set by the Investment Corporation of Pakistan.

  • Dividends received from a Domestic Company out of income earned abroad provided it is engaged abroad exclusively in rendering technical services in accordance with an agreement approved by the Central Board of Revenue.

Unilateral Relief

A person resident in Pakistan is entitled to a relief in tax on any income earned abroad, if such income has already been subjected to tax outside Pakistan. Proportionate relief is allowed on such income at an average rate of tax in Pakistan or abroad, whichever is lower.

PAKISTAN TAX YEAR 2019 - 2020

Tax Rates for Salaried Individuals

Division I, Part I, 1st Schedule

Serial No

Taxable Income

Rate of Tax

01

Where the taxable income does not exceed Rs.600,000

0%

02

Where the taxable income exceeds Rs.600,000 but does not exceed Rs.1,200,000

5% of the amount exceeding Rs.600,000

03

Where the taxable income exceeds Rs.1,200,000 but does not exceed Rs.1,800,000

Rs.30,000 plus 10% of the amount exceeding Rs.1,200,000

04

Where the taxable income exceeds Rs.1,800,000 but does not exceed Rs.2,500,000

Rs.90,000 plus 15% of the amount exceeding Rs.1,800,000

05

Where the taxable income exceeds Rs.2,500,000 but does not exceed Rs.3,500,000

Rs.195,000 plus 17.5% of the amount exceeding Rs.2,500,000

06

Where the taxable income exceeds Rs. 3,500,000 but does not exceed Rs.5,000,000

Rs.370,000 plus 20% of the amount exceeding Rs.3,500,000

07

Where the taxable income exceeds Rs. 5,000,000 but does not exceed Rs.8,000,000

Rs.670,000 plus 22.5% of the amount exceeding Rs.5,000,000

08

Where the taxable income exceeds Rs. 8,000,000 but does not exceed Rs.12,000,000

Rs.1,345,000 plus 25% of the amount exceeding Rs.8,000,000

09

Where the taxable income exceeds Rs. 12,000,000 but does not exceed Rs.30,000,000

Rs.2,345,000 plus 27.5% of the amount exceeding Rs.12,000,000

10

Where the taxable income exceeds Rs. 30,000,000 but does not exceed Rs.50,000,000

Rs.7,295,000 plus 30% of the amount exceeding Rs.30,000,000

11

Where the taxable income exceeds Rs. 50,000,000 but does not exceed Rs.75,000,000

Rs.13,295,000 plus 32.5% of the amount exceeding Rs.50,000,000

12

Where the taxable income exceeds Rs. 75,000,000

Rs.21,420,000 plus 35% of the amount exceeding Rs.75,000,000

Every person responsible for making payment for directorship fee or fee for attending Board meeting or such fee by whatever name called.

20% of gross amount paid

Table: Tax Rates for Salaried Individuals | Value of accomodation and conveyance provided by the employer is chargeable to tax under reule 4 & 5 of the Income Tax Rules, 2002.

All perquisites and allowances are liable to tax without any exemption except special and medical allowance under Clause 39 and 139 respectively of Part-1 of 2nd Schedule.

Tax Rates for Individuals & Association of Persons (Other Than Salaried)

Division I, Part I, 1st Schedule

Serial No

Taxable Income

Rate of Tax

01

Where the taxable income does not exceed Rs.400,000

0%

02

Where the taxable income exceeds Rs.400,000 but does not exceed Rs.600,000

5% of the amount exceeding Rs.400,000

03

Where the taxable income exceeds Rs.600,000 but does not exceed Rs.1,200,000

Rs.10,000 plus 10% of the amount exceeding Rs.600,000

04

Where the taxable income exceeds Rs.1,200,000 but does not exceed Rs.2,400,000

Rs.70,000 plus 15% of the amount exceeding Rs.1,200,000

05

Where the taxable income exceeds Rs.2,400,000 but does not exceed Rs.,000,000

Rs.250,000 plus 20% of the amount exceeding Rs.2,400,000

06

Where the taxable income exceeds Rs.3,000,000 but does not exceed Rs.4,000,000

Rs.370,000 plus 25% of the amount exceeding Rs.3,000,000

07

Where the taxable income exceeds Rs.4,000,000 but does not exceed Rs.6,000,000

Rs.620,000 plus 30% of the amount exceeding Rs.4,000,000

08

Where the taxable income exceeds Rs.6,000,000

Rs.1,220,000 plus 35% of the amount exceeding Rs.6,000,000

Table: Tax Rates for Individuals & Association of Persons (Other Than Salaried)

Tax Rates for Companies

Division II, Part I, 1st Schedule

Serial No

Type

Rate of Tax

01

Banking Companies

35%

02

Public / Private Companies

29%

03

Small Companies

23%

04

Alternate Corporate Tax (ACT) u/Sec. 113C

17% of accounting profit

Table: Tax Rates for Companies | Where the taxpayer is a small company as defined in Section 2 of the Income Tax Ordinance, 2001, tax shall be payable at the rate of 24%

Super Tax

Division II, Part I, 1st Schedule

Serial No

Type

Rate of Tax

01

Banking Company

4%

02

Other than a Banking Company, having income equal to or exceeding Rs.500 million

2%

Table: Super Tax

Gradual Reduction in Corporate Tax Rates

Serial No

Tax Year

Rate of Tax

01

2019

24%

02

2020

23%

03

2021

22%

04

2022

21%

05

2023 and onwards

20%

Table: Gradual Reduction in Corporate Tax Rates

Dividend Tax

Division III, Part I, 1st Schedule

Serial No

Description

Rate of Tax

01

In case of dividend paid by Independent Power Purchaser where such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be reimbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entity.

7.5%

02

In cases other than mentioned in 01 and 03.

15%

03

In case of dividend received by a person from a mutual fund.

25%

Table: Dividend Tax | As per 10th Schedule, Tax Rate shall be increased by 100% in case the person is not appearing in Active Taxpayers’ List.

Tax for Profit on Debt – Other than a Compaany (Sec. 7B)

Division III A, Part I, 1st Schedule

Serial No

Profit on Debt

Rate of Tax

01

Where profit on debt does not exceed Rs.5,000,000

15%

02

Where profit on debt exceeds Rs.5,000,000 but does not exceed Rs.25,000,000

17.5% of the amount exceeding Rs.5,000,000

03

Where profit on debt exceeds Rs.25,000,000 but does not exceed Rs.36,000,000

20% of the amount exceeding Rs.25,000,000

Table: Tax for Profit on Debt | As per 10th Schedule, Tax Rate shall be increased by 100% in case the person is not appearing in Active Taxpayers’ List.

Profit on Debt exceeding Rs.36 million shall be subject to tax under normal law.

Tax on Shipping or Air Transport Income of a Non-Resident Person

Serial No

Description

Rate of Tax

01

In the case of shipping income

8% of the gross amount received or receivable

02

In the case of air transport income

3% of the gross amount received or receivable

Table: Tax on Shipping or Air Transport Income of a Non-Resident Person

Tax on Return on Investment (Sec. 5AA)

Division III B, Part I, 1st Schedule

Serial No

Sukuk-holder

Rate of Tax

01

Company

25%

02

Individual and AOP, if the return on investment is more than Rs.1,000,000

12.5%

03

Individual and AOP, if the return on investment is less than Rs.1,000,000

10%

Table: Tax on Return on Investment | As per 10th Schedule, Tax Rate shall be increased by 100% in case the person is not appearing in Active Taxpayers’ List

Tax on Certain Payments to Non-Residents

Serial No

Category

Rate of Tax

01

Royalty (Sec. 6)

15% of the gross amount

02

Fee for Technical Services (Sec. 6)

15% of the gross amount

03

Offshore digital services (Sec. 6)

5% of the gross amount

04

Shipping income (Sec. 7)

8% of the gross amount received or receivables

05

Air transport income (Sec. 7)

3% of the gross amount received or receivables

Table: Tax on Certain Payments to Non-Residents | As per 10th Schedule, Tax Rate shall be increased by 100% in case the person is not appearing in Active Taxpayers’ List

Tax on Income from Property for Individuals and Association of Persons (Sec. 15)

Division V, Part I, 1st Schedule

Serial No

Gross Amount of Rent

Rate of Tax

01

Where the gross amount of rent does not exceed Rs.200,000

Nil

02

Where the gross amount of rent exceeds Rs.200,000 but does not exceed Rs.600,000

5% of the gross amount exceeding Rs.200,000

03

Where the gross amount of rent exceeds Rs.600,000 but does not exceed Rs.1,000,000

Rs.20,000 + 10% of the gross amount exceeding Rs.600,000

04

Where the gross amount of rent exceeds Rs.1,000,000 but does not exceed Rs.2,000,000

Rs.60,000 + 15% of the gross amount exceeding Rs.1,000,000

05

Where the gross amount of rent exceeds Rs.2,000,000 but does not exceed Rs.4,000,000

Rs.210,000 + 20% of the gross amount exceeding Rs.2,000,000

06

Where the gross amount of rent exceeds Rs.4,000,000 but does not exceed Rs.6,000,000

Rs.610,000 + 25% of the gross amount exceeding Rs.4,000,000

07

Where the gross amount of rent exceeds Rs.6,000,000 but does not exceed Rs.8,000,000

Rs.1,110,000 + 30% of the gross amount exceeding Rs.6,000,000

08

Where the gross amount of rent exceeds Rs.8,000,000

Rs.1,710,000 + 35% of the gross amount exceeding Rs.8,000,000

Table: Tax on Income from Property

Capital Gains on Disposal of Securities

Division VII, Part I, 1st Schedule

Serial No

Period

Tax Year 2015

Tax Year 2016

Tax Year 2017

Tax Years 2018 to 2020

Securities acquired prior 01.07.2016

Securities acquired after 01.07.2016

01

Where holding period of a security is less than twelve months

12.5%

15%

15%

15%

15%

02

Where holding period of a security is twelve months or more but less than twenty-four months

10%

12.5%

12.5%

12.5%

15%

03

Where holding period of a security is twenty-four months or more but the security was acquired on or after 1st July, 2013

0%

7.5%

7.5%

7.5%

15%

04

Where the security was acquired before 1st July, 2013

0%

0%

0%

0%

0%

05

Future commodity contracts entered into by the members of Pakistan Mercantile Exchange

0%

0%

5%

5%

5%

Table: Capital Gains on Disposal of Securities | As per 10th Schedule, Tax Rate shall be increased by 100% in case the person is not appearing in Active Taxpayers’ List

A Mutual Fund or a Collective Investment Scheme or a REIT Scheme shall deduct Capital Gains Tax at the rates as specified below on Redemtion of Securities, as specified below:

Serial No

Category

Rate of Tax

01

Individual and Association of Persons

10% for stock funds

10% for other funds

02

Company

10% for stock funds

25% for other funds

Provided further that in case of a stock fund if dividend receipts of the fund are less than capital gains, then the rate of tax deduction shall be 12.5%. No capital gains tax shall be deducted, if the holding period of the security is more than 4 years.

Capital Gains on Disposal of Immovable Property (Sec. 37(1A))

Division VIII, Part I, 1st Schedule

Serial No

Period

Rate of Tax

01

Where the gain does not exceed Rs.5 million

5%

02

Where the gain exceeds Rs.5 million but does not exceed Rs.10 million

10%

03

Where the gain exceeds Rs.10 million but does not exceed Rs.15 million

15%

04

Where the gain exceeds Rs.15 million

20%

Table: Capital Gains on Disposal of Immovable Property

Capital Gains on Disposal of Immovable Property being an Open Plot (Sec. 37(3A))

Serial No

Holding Period

Rate of Tax

01

Where the holding period of open plot does not exceed one year

100%

02

Where the holding period of open plot exceeds one year but does not exceed eight years

75%

03

Where the holding period of open plot exceeds eight years

0%

Table: Capital Gains on Disposal of Immovable Property being an Open Plot

Capital Gains on Disposal of Immovable Property being a Constructed Property (Sec. 37(3B))

Serial No

Holding Period

Rate of Tax

01

Where the holding period of constructed property does not exceed one year

100%

02

Where the holding period of constructed property exceeds one year but does not exceed four years

75%

03

Where the holding period of constructed property exceeds four years

0%

Table: Capital Gains on Disposal of Immovable Property being a Constructed Property

Tax on Builders (Sec. 7C)

Division VIII A, Part I, 1st Schedule

Karachi, Lahore and Islamabad

Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad and Quetta

Urban Areas not specified in A and B

For Commercial Buildings

Rs.210 / Sq Ft

Rs.210 / Sq Ft

Rs.210 / Sq Ft

For Residential Buildings

Area Sq. ft

Rate Sq. ft

Area Sq. ft

Rate Sq. ft

Area Sq. ft

Rate Sq. ft

Up to 750

Rs.20

Up to 750

Rs.15

Up to 750

Rs.10

751 to 1500

Rs.40

751 to 1500

Rs.35

751 to 1500

Rs.25

1501 and more

Rs.70

1501 and more

Rs.55

1501 and more

Rs.35

Table: Tax on Builders

Tax on Developers (Sec. 7D)

Division VIII B, Part I, 1st Schedule

Karachi, Lahore and Islamabad

Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad and Quetta

Urban Areas not specified in A and B

For Commercial Plots

Rs.210 / Sq Yd

Rs.210 / Sq Yd

Rs.210 / Sq Yd

For Residential Plots

Area Sq. Yd

Rate Sq. Yd

Area Sq. Yd

Rate Sq. Yd

Area Sq. Yd

Rate Sq. Yd

Up to 120

Rs.20

Up to 120

Rs.15

Up to 120

Rs.10

121 to 200

Rs.40

121 to 200

Rs.35

121 to 200

Rs.25

201 and more

Rs.70

201 and more

Rs.55

201 and more

Rs.35

Table: Tax on Developers

Minimum Tax (Sec. 113)

Division IX, Part I, 1st Schedule

Serial No

Person(s)

Minimum Tax as percentage of the person’s turnover for the year

01

  • Oil marketing companies, Oil refineries, Sui Southern Gas Company Limited and Sui Northern Gas Pipeline Limited (for the cases where annual turnover exceeds rupees one billion);

  • Pakistani Airlines;

  • Poultry industry including poultry breeding, broiler production, egg production and poultry feed production;

  • Dealers or distributors of fertilizers; and

  • Person running an online marketplace as defined in clause (38B) of Section 2.

0.75%

02

  • Distributors of pharmaceutical products, fast moving consumer goods and cigarettes;

  • Petroleum agents and distributors who are registered under the Sales Tax Act, 1990;

  • Rice mills and dealers; and

  • Flour mills

0.25%

03

Motorcycle dealers registered under the Sales Tax Act, 1990

0.30%

04

In all cases (other than 1 to 3 and 5)

1.5%

05

Clause (24D) of Part II of the Second Schedule

Dealers and sub-dealers of sugar, cement and edible oil subject to the condition that the names are appearing on the ATL issued under the Sales Tax Act, 1990 and the Income Tax Ordinance, 2001

0.25%

Table: Minimum Tax

Reduction in Tax Liability for Full Time Teacher

Clause (2), Part III of 2nd Schedule

The tax payable by a fulltime teacher or a researcher, employed in a non-profit education or research institution duly recognised by HEC, a Board of Education or a University recognised by HEC including government research institution shall be reduced by an amount equal to 25% of the tax payable on his income from salary.

Provided that this clause shall not apply to teachers of medical profession who derive income from private medical practice or who receive share of consideration received from patients.

Table: Reduction in Tax Liability for Full Time Teacher

Payment of Advance Tax

Sec. 147

Installment

Quarter

Due Dates

Individuals

AOPs / Companies

01

September

15th September

25th September

02

December

15th December

25th December

03

March

15th March

25th March

04

June

15th June

25th June

Table: Payment of Advance Tax

Advance Tax

Serial No

Person(s)

Rate of Tax

01

  • Industrial undertaking importing re-meltable steel (PCT Heading 72.04) and directly reduced iron for its own use;

  • Persons importing potassic fertilizers in pursuance of Economic Coordination Committee of the cabinet’s decision No. ECC-155/12/2004 dated the 9th December, 2004;

  • Persons importing urea;

  • Manufacturers covered under Notification No. S.R.O. 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O. 1125(I)/2011 dated the 31st December, 2011

  • Persons importing Gold;

  • Persons importing Cotton; and

  • Persons importing LNG

1% of the import value as increased by customs-duty, sales tax and federal excise duty

02

Persons importing pulses

2% of the import value as increased by customs-duty, sales tax and federal excise duty

03

Commercial importers covered under Notification No. S.R.O. 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated the 31st December, 2011.

3% of the import value as increased by customs-duty, sales tax and federal excise duty

04

Persons importing coal

4%

05

Persons importing finished pharmaceutical products that are not manufactured otherwise in Pakistan, as certified by the Drug Regulatory Authority of Pakistan

4%

06

Ship breakers on import of ships

4.5%

07

Industrial undertakings not covered under S. Nos 01 to 06

5.5%

08

Companies not covered under S. Nos. 01 to 07

5.5%

09

Persons not covered under S. Nos. 01 to 08

6%

Table: Advance Tax

Advance Tax on Dividend

Serial No

Description

Rate of Tax

01

In case of dividends paid by Independent Power Purchasers where such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be re-imbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entoty.

7.5%

02

Other than mentioned above

15%

Table: Advance Tax on Dividend

Tax on Brokerage and Commission

Serial No

Person(s)

Rate of tax

01

Advertising Agents

10%

02

Life Insurance Agents where commission received is less than Rs. 0.5 million per annum

8%

03

Persons not covered in 1 and 2 above

12%

Table: Tax on Brokerage and Commission

Collection of Tax by a Registered Stock Exchange in Pakistan

Serial No

Description

Rate of Tax

01

In case of purchase of shares as per clause (a) of sub-section (1) of Section 233A.

0.02% of purchase value

02

In case of purchase of shares as per clause (b) of sub-section (1) of Section 233A.

0.02% of sale value

Table: Collection of Tax by a Stock Exchange in Pakistan

Collection of Tax on Passenger Transport Vehicles

Serial No

Capacity

Rate per seat per annum

01

Four or more persons but less than ten persons.

Rs.50

02

Ten or more persons but less than twenty persons.

Rs.100

03

Twenty persons or more.

Rs.300

Table: Collection of Tax on Passenger Transport Vehicles

Yearly Collection of Tax on Private Motor Vehicles

Serial No

Engine Capacity

Rate of Tax

01

Up to 1000cc

Rs.800

02

1001cc to 1199cc

Rs.1,500

03

1200cc to 1299cc

Rs.1,750

04

1300cc to 1499cc

Rs.2,500

05

1500cc to 1599cc

Rs.3,750

06

1600cc to 1999cc

Rs.4,500

07

2000cc and above

Rs.10,000

Table: Yearly Collection of Tax on Private Motor Vehicles

Lump sum Collection of Tax on Private Motor Vehicles

Serial No

Engine Capacity

Rate of Tax

01

Up to 1000cc

Rs.10,000

02

1001cc to 1199cc

Rs.1,8000

03

1200cc to 1299cc

Rs.20,000

04

1300cc to 1499cc

Rs.30,000

05

1500cc to 1599cc

Rs.45,000

06

1600cc to 1999cc

Rs.60,000

07

2000cc and above

Rs.120,000

Table: Lump sum Collection of Tax on Private Motor Vehicles

Collection of Tax on Electricity Consumption

Serial No

Electricity Bill

Amount in Rs.

01

Does not exceed Rs.400

0

02

Exceeds Rs.400 but does not exceed Rs.600

80

03

Exceeds Rs.600 but does not exceed Rs.800

100

04

Exceeds Rs.800 but does not exceed Rs.1,000

160

05

Exceeds Rs.1,000 but does not exceed Rs.1,500

300

06

Exceeds Rs.1,500 but does not exceed Rs.3,000

350

07

Exceeds Rs.3,000 but does not exceed Rs.4,500

450

08

Exceeds Rs.4,500 but does not exceed Rs.6,000

500

09

Exceeds Rs.6,000 but does not exceed Rs.10,000

650

10

Exceeds Rs.10,000 but does not exceed Rs.15,000

1,000

11

Exceeds Rs.15,000 but does not exceed Rs.20,000

1,500

12

Exceeds Rs.20,000

  • At the rate of 12% for commercial consumers; and

  • At the rate of 5% for industrial consumers.

Table: Collection of Tax on Electricity Consumption

Advance Tax on Domestic Electricity Consumption

Serial No

Description

Rate of Tax

01

If the amount of monthly bill is Rs.75,000 or more

7.5%

02

If the amount of bill is less than Rs.75,000

0%

Table: Advance Tax on Domestic Electricity Consumption

Collection of Tax on Telephone Users

Serial No

Description

Rate of Tax

01

In the case of a telephone subscriber (other than mobile phone subscriber) where the amount of monthly bill exceeds Rs.1,000

10% of the exceeding amount of bill

02

In the case of subscriber of internet, mobile telephones and pre-paid internet or telephone card

12.5% of the amount of bill or sales price of internet pre-paid card or prepaid telephone card or sale of units through any electronic medium or whatever form.

Table: Collection of Tax on Telephone Users

Tax on Cash Withdrawal from a Bank

Serial No

Description

Rate of Tax

01

Cash amount withdrawn, for the person whose name is not appearing in the active taxpayer’s list.

0.6% of the amount withdrawn

Table: Tax on Cash Withdrawal from a Bank

Advance Tax on Transactions in Bank [Transferor]

Serial No

Description

Rate of Tax

01

The rate of tax to be deducted under Sec. 231AA for the person whose name is not appearing in the active taxpayers’ list.

0.6% of the transaction

Table: Advance Tax on Transactions in Bank

Advance Tax on Banking Transactions Otherwise Than Through Cash [Receiver]

Serial No

Description

Rate of Tax

01

Banking Transaction (other than cash) at the time of sale of instrument, including demand draft, pay order, special deposit receipt, transfer of any sum through cheque, online transfer, ATM transfers or any other mode of electronic or paper based transfers.

0.4% of the transaction amount

Table: Advance Tax on Banking Transactions Otherwise Than Through Cash

Advance Tax on Purchase, Registration and Transfer of Motor Vehicles

Serial No

Engine Capacity

Rate of Tax

01

Up to 850cc

Rs.7,500

02

851cc to 1000cc

Rs.1,5000

03

1001cc to 1300cc

Rs.25,000

04

1301cc to 1600cc

Rs.50,000

05

1601cc to 1800cc

Rs.75,000

06

1801cc to 2000cc

Rs.100,000

07

2001cc to 2500cc

Rs.150,000

08

2501cc to 3000cc

Rs.200,000

09

Above 3000cc

Rs.250,000

Table: Advance Tax on Purchase, Registration and Transfer of Motor Vehicles

Advance Tax on Transfer of Registration or Ownership of Motor Vehicles

Serial No

Engine Capacity

Rate of Tax

01

Up to 850cc

__

02

851cc to 1000cc

Rs.5,000

03

1001cc to 1300cc

Rs.7,500

04

1301cc to 1600cc

Rs.12,500

05

1601cc to 1800cc

Rs.18,750

06

1801cc to 2000cc

Rs.25,000

07

2001cc to 2500cc

Rs.37,500

08

2501cc to 3000cc

Rs.50,000

09

Above 3000cc

Rs.62,500

Table: Advance Tax on Transfer of Registration or Ownership of Motor Vehicles

Tax on Cable Television Operator

License Category as provided in PEMRA Rules

Tax on License Fee

Tax on Renewal

H

Rs.7,500

Rs.10,000

H-1

Rs.10,000

Rs.15,000

H-2

Rs.25,000

Rs.30,000

R

Rs.5,000

Rs.12,000

B

Rs.5,000

Rs.40,000

B-1

Rs.30,000

Rs.35,000

B-2

Rs.40,000

Rs.45,000

B-3

Rs.50,000

Rs.75,000

B-4

Rs.75,000

Rs.100,000

B-5

Rs.87,500

Rs.150,000

B-6

Rs.175,000

Rs.200,000

B-7

Rs.262,500

Rs.300,000

B-8

Rs.437,500

Rs.500,000

B-9

Rs.700,000

Rs.800,000

B-10

Rs.875,500

Rs.900,000

Table: Tax on Cable Television Operator

Advance Tax on Sale to Distributors, Dealers or Wholesalers

Serial No

Category of Sales

Rate of Tax

01

Fertilizers

0.7%

02

Other than Fertilizers

0.1%

Table: Advance Tax on Sale to Distributors, Dealers or Wholesalers

Advance Tax on Dealers, Commission Agents and Arhatis, etc.

Serial No

Group

Amount of Tax

01

Group or Class A

Rs.100,000

02

Group or Class B

Rs.7,5000

03

Group or Class C

Rs.5,0000

04

Any Other Category

Rs.5,0000

Table: Advance Tax on Dealers, Commission Agents and Arhatis, etc.

Advance Tax on Purchase of Immovable Property

Serial No

Period

Rate of Tax

01

Where the value of immovable property is up to 3 million

0%

02

Where the value of immovable property is more than 3 million

1%

Table: Advance Tax on Purchase of Immovable Property

Advance Tax on Sale or Transfer of Immovable Property

Serial No

Description

Rate of Tax

01

The rate of tax to be collected under Sec 236K shall be in accordance with the fair market value.

1%

Table: Advance Tax on Sale or Transfer of Immovable Property

Advance Tax on International Air Ticket

Serial No

Type of Ticket

Rate of Tax

01

First / Executive Class

Rs.16,000 per person

02

Others excluding Economy

Rs.12,000 per person

03

Economy

0

Table: Advance Tax on International Air Ticket

Advance Tax on Functions and Gatherings

Serial No

Locations

Rate of Tax

01

For Islamabad, Lahore, Multan, Faisalabad, Rawalpindi, Gujranwala, Bahawalpur, Sargodha, Sahiwal, Sheikhupura, Dear Ghazi Khan, Karachi, Hyderabad, Sukkur, Thatta, Larkana, Mirpur Khas, Nawabshah, Peshawar, Mardan, Abbotabad, Kohat, Dera Ismail Khan, Quetta, Sibi, Loralai, Khuzdar, Dear Murad Jamali and Turbat.

5% of the bill ad valorem or Rs.20,000 per function, whichever is higher

02

For cities other than those mentioned above.

5% of the bill ad valorem or Rs.10,000 per function, whichever is higher

Table: Advance Tax on Functions and Gatherings

Advance Tax on Insurance Premium

Serial No

Type of Premium

Rate of Tax

01

General insurance premium

4%

02

Life insurance premium if exceeding Rs. 0.3 million in aggregate per annum

1%

03

Others

0%

Table: Advance Tax on Insurance Premium

Advance Tax on Extraction of Minerals

Serial No

Description

Rate of Tax

01

The rate of tax to be collected under Sec 236V as per value of the minerals.

5%

Table: Advance Tax on Extraction of Minerals

Withholding Income Tax Rates

Nature of Payment

Tax Rate

Nature of Tax

(Advance / Final / Minimum Tax)

Persons appearing in ATL

Persons not appearing in ATL

IMPORTS

[Sec. 148 and Part II of First Schedule]

Industrial undertaking importing remittable steel and directly reduced iron for its own use

1%

2%

Advance Tax in the case of:

  • Raw material or plant and machinery imported by industrial undertaking for own use

  • Imports by large import houses

  • Motor vehicles in CBU condition imported by manufacturers of motor vehicles

  • Foriegn produced film for screening and viewing purposes

Minimum Tax in the case of:

  • Goods sold in the same condition those were imported

  • Edible Oil

  • Packing Material

  • In case of import of plastic raw material (PCT) heading 39.01 to 39.12, packing material and edible oil

Persons importing potassic fertilizers under ECC’s decision No ECC-155/12/2004 dated 09-12-2004

Persons importing urea

Manufacturers covered under SRO 1125(1)/2011 dated 31-12-2011 for importing items as per said SRO

Persons importing gold

Persons importing cotton

Persons importing LNG

1%

2%

Persons importing pulses

2%

4%

Industrial undertaking importing plastic raw material (PCT) Heading 39.01 to 39.12 for its own use

1.75%

Companies: 11%

Others: 12%

Commercial importers, importing plastic raw material (PCT) Heaing 39.01 to 39.12

4.5%

Commercial importers covered under SRO 1125(I)/2011 dated 31-12-2011

3%

6%

Persons importing coal

4%

8%

Persons importing finished pharmaceutical products that are not manufactured in Pakistan, as certified by the Drug Regulatory Authority of Pakistan

4%

8%

Ship breaker on import of ships

4.5%

9%

Companies and industrial undertakings not covered above

5.5%

11%

Others

6%

12%

DIVIDEND, INCLUDING DIVIDEND IN SPECIE

[Sec. 150, 236S, Division I Part III First Schedule & Clause 11B Part IV Second Schedule]

Dividend from a company where no tax is payable by such company due to exemption of income or carry forward of business losses or claim of any tax credits

25%

50%

Final Tax

Inter-corporate dividend within the group companies covered under group taxation, where return of the group has been filed for the latest completed tax year

0%

0%

Other cases, including repatriation of after-tax profits by branches of foreign companies

15%

30%

RETURN ON INVESTMENT IN SUKUKS

[Sec. 150A, Division IB Part III First Schedule]

Received by Company

15%

30%

Final Tax

Received by an individual or an AOP, if profit is more than Rs.1 million

12.5%

25%

Received by an individual or an AOP, if profit is less than Rs.1 million

10%

20%

PROFIT ON DEBT

[Sec. 150A, Division IB Part III First Schedule]

Where debt yield is up to Rs.500,000

10%

Advance Tax in the case of companies

Minimum Tax in other cases

Where debt yield is above Rs.500,000

15%

30%

PAYMENTS TO NON-RESIDENTS

[Sec. 152, Division IV Part I First Schedule & Division III First Schedule]

Royalty or fee for technical services

15%

30%

Minimum Tax

Fee for offshore digital services

5%

10%

Contracts or related services

7%

14%

Insurance or re-insurance premium

5%

10%

Advertisement services to a non-resident media person relaying from outside Pakistan

10%

10%

Execution of contract by sportspersons

10%

20%

Any other receipt

20%

40%

PAYMENTS TO PERMANENT ESTABLISHMENT (PE) OF NON-RESIDENTS

[Sec. 152, Division II Part III First Schedule]

Sale / supply of goods by PE of non-resident company

4%

8%

Minimum Tax

Sale / supply of goods by PE of other non-residents

4.5%

9%

Rendering / providing of services by PE of non-resident company

8%

16%

Rendering / providing of services by PE of other non-residents

10%

20%

Rendering / providing of transport services

2%

4%

Execution of contract other than contract for sale or services by PE of non-resident company

7%

14%

Execution of contract other than contract for sale or services by PE of other non-residents

7%

14%

PAYMENTS FOR FOREIGN PRODUCED COMMERCIALS

[Sec. 152, Division II Part III First Schedule]

Payment against foreign produced advertisement commercial to non-residents

20%

Final Tax

PAYMENTS FOR SUPPLY OF GOODS

[Sec. 153(1)(a), Division III Part III First Schedule & Clause 24A Part II Second Schedule]

Sale of rice, cotton seed oil and edible oil

1.5%

3%

Advance Tax in case of listed companies and companies engaged in manufacturing

Minimum Tax for other cases

Sale by distributors of cigarettes and pharmaceutical products and large import houses

1%

2%

Sale of goods by FMCG distributors, which are companies

2%

4%

Sale of goods by FMCG distributors, which are not companies

2.5%

5%

Sale of any other goods by companies

4%

8%

Sale of any other goods by other than companies

4.5%

9%

No tax to be withheld for payments in case of:

  • Imported goods sold by an importer where tax under Sec. 148 has been paid

  • Yarn sold by traders to taxpayers specified in the sales tax zero-rated regime as provided under clause (45A) of Part IV of Second Schedule

  • Purchase of an asset under a lease and buy back agreement by modarabas, leasing / banking companies or financial institutions

PAYMENTS FOR SERVICES

[Sec. 153(1)(b), 153(2) Division III Part III First Schedule & Division IV Part III First Schedule]

Person providing advertising services (electronic and print media services)

1.5%

3%

Minimum Tax

Persons providing transport services, freight forwarding services, air cargo services, courier services, manpower outsourcing services, hotel services, security guard services, software development services, IT services and IT enabled services as defined under Clause 133 of Part I of Second Schedule, tracking services, advertising services (other than by print or electronic media), share registered services, engineering services, car rental services, building maintenance services, services rendered by PSE and PMEL, inspection, certification, testing and training services

4%

8%

Companies providing other services

8%

16%

Non-company entities providing other services

10%

20%

By export houses for services rendered for stitching dyeing, printing, embroidery, washing, sizing and weaving

1%

2%

No tax to be withheld for payments in case of payment for securitisation of receivables by Special Purpose Vehicles to Originators. Any tax deducted by a person making payment for a Special Purpose Vehicle, on behalf of the Originator, the tax is credited to the Originator.

PAYMENT ON ACCOUNT OF EXECUTION OF CONTRACTS

[Sec. 153(1)(c) and Division III Part III First Schedule]

To companies

7%

14%

Advance Tax for listed companies

Minimum Tax for non-listed companies

To sportsperson

10%

20%

Minimum Tax

To others

7.5%

15%

PAYMENT OF ROYALTY TO RESIDENT PERSONS

[Sec. 153b and Division IIIb Part III First Schedule]

On gross amount of royalty

15%

30%

Advance Tax

EXPORTS

[Sec. 154, Division IV Part III First Schedule & Clause 47C Part IV Second Schedule]

At the time of realisation of proceeds on export of goods (Exemption to cooking oil or vegetable ghee exported to afghanistan if tax u/Sec. 148 is paid)

1%

Final Tax

Exporters may opt at the time of filing of return that the tax collected to be treated as Minimum Tax

Indenting commission on realisation of proceeds on account of commission to indenting agent

5%

Inland back to back LC by exporter on sale of goods under inland back to back LC or any other arrangement as may be prescribed by FBR

1%

Export of goods by units located in EPZ

1%

Payment for a firm contract by direct exporters or export houses registered under DTRE Rules, 2001 to an indirect exporter as per the said Rules.

1%

PROPERTY INCOME / RENTALS

[Sec. 155, Division V Part III First Schedule]

To Companies

15% of the gross amount of rent

Advance Tax

To Individuals & AOPs

Annual Rent (Rs.)

Tax Rate

From

To

Up to 200,000

Nil

200,001

600,000

5% of the amount exceeding Rs.200,000

600,001

1,000,000

Rs.20,000 + 10% of the amount exceeding Rs.600,000

1,000,001

2,000,000

Rs.60,000 + 15% of the amount exceeding Rs.1,000,000

2,000,001

4,000,000

Rs.210,000 + 20% of the amount exceeding Rs.2,000,000

4,000,001

6,000,000

Rs.610,000 + 25% of the amount exceeding Rs.4,000,000

6,000,001

8,000,000

Rs.1,110,000 + 30% of the amount exceeding Rs.6,000,000

Above Rs.8,000,000

Rs.1,710,000 + 35% of the amount exceeding Rs.8,000,000

PRIZES AND WINNINGS

[Sec. 156, Division VI Part III First Schedule]

Prize on prize bonds and crossword puzzle

15%

30%

Final Tax

Winning from a raffle, lottery, prize on winning a quiz or prizes related to companies’ sales promotion schemes

20%

40%

PETROLEUM PRODUCTS

[Sec. 156A, Division VIA Part III First Schedule]

Commission or discout to petrol pump operators on petroleum products

12%

24%

Final Tax

WITHDRAWAL OF BALANCE UNDER PENSION FUND

[Sec. 156B]

Withdrawal before retirement age

Average rate of tax for 3 preceding years or rate applicable for the year whichever is lower

Final Tax (Separate Block of Income)

Withdrawal in excess of 50% of accumulated balance at or after the retirement age

CASH WITHDRAWAL FROM BANKS

[Sec. 231A, Division VI Part IV First Schedule & Clause 28B Part II Second Schedule]

Exchange company, duly licensed and authorised by SBP, subject to specified conditions

0.15%

Advance Tax

Cash withdrawals from Pak Rupees bank accounts where foreign remittances credited directly such accounts

Exempt

Exempt

Exempt

Other cases where total withdrawals in a day exceeds Rs.50,000 from all bank accounts

Exempt

0.6%

Advance Tax

TRANSACTIONS IN BANKS – Banking Instrument purchased against payment in cash

[Sec. 231A, Division VIA Part IV First Schedule]

Sale against cash of any instrument including demand draft, payment order, CDR, STDR, RTC or any other instrument of bearer nature except payment is made throuh a crossed cheque

Exempt

0.6%

Advance Tax

TAX ON MOTOR VEHICLES

[Sec. 231B, 234 Division VII Part IV First Schedule & Division III Part IV First Schedule]

Tax on purchase / transfer of motor vehicles along with annual motor vehicle tax (Not applicable to Federal, Provincial and Local Govts., Foreign Diplomatic Missions in Pakistan)

Various rates based on engine capacity

Advance Tax

On value of motor vehicle leased by Leasing Companies, Scheduled Banks, Investment Banks, DFIs or Modarabas

0%

4%

BROKERAGE & COMMISSION

[Sec. 233, Division II Part IV First Schedule]

Advertising Agents

10%

20%

Minimum Tax

Life Insurance Agents where commission received is less than Rs.0.5 million per annum

8%

16%

Others

12%

24%

COLLECTION OF TAX BY STOCK EXCHANGES IN LIEU OF TAX ON COMMISSION

[Sec. 233A, Division IIA Part IV First Schedule]

On purchase of shares

0.02%

0.04%

Advance Tax

On sale of shares

0.02%

0.04%

COLLECTION OF TAX BY NCCPL FROM MEMBERS OF STOCK EXCHANGES

[Sec. 233AA, Division IIB Part IV First Schedule]

In respect of financing of carryover trade, margin financing, margin trading nor securities lending in shares business

10%

Advance Tax

CNG STATIONS

[Sec. 233A, Division VIB Part IV First Schedule]

On the amount of gas bill

4%

6%

Minimum Tax

ELECTRICITY CONSUMPTION

[Sec. 235, Division IV Part IV First Schedule & Clause 66 Part IV Second Schedule]

Electricity bil of commercial or industrial consumers [Exporters-cum-manufacturers are exempt from this collection]

Various rates

Minimum Tax (for non-corporate taxpayers upto Rs.360,000)

Advance Tax (for other cases)

DOMESTIC ELECTRICITY CONSUMPTION

[Sec. 235A, Division XIX Part IV First Schedule]

Where the amount of monthly bill is less than Rs.75,000

0%

Advance Tax

Where the amount of monthly bill is Rs.75,000 and above

7.5%

STEEL MELTERS, RE-ROLLERS ETC.

[Sec. 235B / Sec 153(1)]

Electricity consumed for the production of steel billets, ingots and mild steel (MS products) excluding stainless steel by steel-melters, steel re-rollers, composite steel units (registered for the purpose of Chapter XI of Sales Tax Special Procedure Rules, 2007)

Rs.1 per unit of electricity consumed

Non-adjustable / Final Tax

TELEPHONE USERS

[Sec. 236, Division V Part IV First Schedule]

Mobile phone bills and prepaid telephone cards

12.5%

Advance Tax

Landline bills exceeding Rs.1,000

10%

Post-paid internet and prepaid internet cards

12.5%

SALE BY AUCTION

[Sec. 236A, Division VIII Part IV First Schedule]

Sale of property, goods or lease of right by public auction or tender

10%

20%

Advance Tax

Sale of lease of the right to collect tolls

10%

20%

Final Tax

PURCHASE OF DOMESTIC AIR TICKETS

[Sec. 236B, Division IX Part IV First Schedule]

Tickets for routes of Balochistan coastal belt, Azad Jammu and Kashmir, FATA, Gilgit-Baltistan and Chitral

Exempt

Not Applicable

Other routes

5%

Advance Tax

SALE OR TRANSFER OF IMMOVABLE PROPERTY

[Sec. 236C, Division X Part IV First Schedule]

To be collected from seller or transferor at the time of recording or attesting the transfer, where holding period of property is up to 5 years.

1%

2%

Advance Tax

To be collected from seller or transferor at the time of registering or attesting the transfer, where holding period or property is above 5 years

0%

FUNCTIONS & GATHERINGS

[Sec. 236D, Division XI Part IV First Schedule]

To be collected from a person arranging or holding a function on total amount of bill and also for food, service or facility

5%

Advance Tax

Function of marriage for Islamabad, Lahore, Multan, Faisalabad, Rawalpindi, Gujranwala, Bahawalpur, Sargodha, Sahiwal, Sheikhupura, Dear Ghazi Khan, Karachi, Hyderabad, Sukkur, Thatta, Larkana, Mirpur Khas, Nawabshah, Peshawar, Mardan, Abbotabad, Kohat, Dera Ismail Khan, Quetta, Sibi, Khuzdar, Dera Murad Jamali and Turbat

Higher of 5% of the bill ad valorem or Rs.20,000 per function

For cities other than those mentioned above

Higher of 5% of the bill ad valorem or Rs.10,000 per function

CABLE OPERATORS AND OTHER ELECTRONIC MEDIA

[Sec. 236F, Division XIII Part IV First Schedule]

From IPTV, FM Radio, MMDS, Mobile TV, Mobile Audio, Satellite TV Channel and Landing Rights

20% of the permission fee or renewal fee

Advance Tax

From cable operators

Various Rates

From every TV channel in respect of screening or viewing Foreign TV Drama serial or a play in any language other than English

50% of the permission fee or renewal fee

TAX ON SALES TO DISTRIBUTORS, DEALERS AND WHOLESALERS BY MANUFACTURERS AND COMMERCIAL IMPORTERS

[Sec. 236G, Division XIV Part IV First Schedule]

On sale of fertilizers

0.7%

1.4%

Advance Tax

On sale of electronics, sugar, cement, iron & steel products, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint, batteries or foam

0.1%

0.2%

TAX ON SALES TO RETAILERS AND WHOLESALERS BY MANUFACTURERS. DISTRIBUTORS, DEALERS, WHOLESALERS OR COMMERCIAL IMPORTERS

[Sec. 236H, Division XV Part IV First Schedule]

On sale of electronics

1%

2%

Advance Tax

On sale of sugar, cement, iron & steel products, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint, batteries or foam

0.5%

1%

TAX ON SALES OF CERTAIN PETROLEUM PRODUCTS

[Sec. 236HA, Division XVA Part IV First Schedule]

On supply of petroleum products to a petrol pump operator or distributor

0.5%

1%

Advance Tax

COLLECTION OF TAX BY EDUCATIONAL INSTITUTIONS WHERE FEE EXCEEDS Rs.200,000

[Sec. 236I, Division XVI Part IV First Schedule]

From resident

5%

Advance Tax

From non-resident

Exempt

Not Applicable

TAX ON DEALERS, COMMISSION AGENTS AND ARHATIS ON ISSUANCE / RENEWAL OF LICENSE

[Sec. 236J, Division XVII Part IV First Schedule]

To be collected by market committees

Various rates

Advance Tax

PURCHASE OR TRANSFER OF IMMOVABLE PROPERTY

[Sec. 236K, Division XVIII Part IV First Schedule]

On fair market value

1%

2%

Advance Tax

INTERNATIONAL AIR TICKETS

[Sec. 236L, Division XX Part IV First Schedule]

First / Executive Class

Rs.16,000 per person

Advance Tax

Others Excluding Economy

Rs.12,000 per person

Economy

Nil

ALL TYPE OF BANKING TRANSACTIONS OF NON-FILER

[Sec. 236P, Division XXI Part IV First Schedule]

Transactions otherwise through cash above Rs.50,000 in aggregate from all bank accounts per day

Not Applicable

0.6%

Advance Tax

RENT OR PAYMENT FOR RIGHT TO USE MACHINERY AND EQUIPMENT

[Sec. 236Q, Division XXIII Part IV First Schedule]

To be collected in case of industrial, commercial and scientific equipment and machinery

10%

Final Tax

The deduction shall not be applicable in the following cases:

  • Agricultural machinery; and

  • Machinery owned and leased by leasing companies, investment banks, modarabas, scheduled banks or DFIs

EDUCATION RELATED EXPENSES REMITTED ABROAD

[Sec. 236R, Division XXIV Part IV First Schedule]

Remittance of tuition fee, boarding and lodging expenses, payments for distant learing programmes and any other expenses related to foreign education

5%

Advance Tax

ADVANCE TAX ON INSURANCE PREMIUM

[Sec. 236U, Division XXV Part IV First Schedule]

General Insurance Premium

0%

4%

Advance Tax

Life Insurance Premium exceeding Rs.0.3 million per annum

0%

1%

Others

0%

ADVANCE TAX ON EXTRACTION OF MINERALS

[Sec. 236V, Division XXVI Part IV First Schedule]

Value of minerals extracted, produced dispatched and carried away from licensed or leased areas of mines – to be collected by provincial revenue authority / board

0%

5%

Advance Tax

ADVANCE TAX ON PURCHASE OF TOBACCO

[Sec. 236X]

To be collected by Pakistan Tobacco Board or its contractor on value of tobacco purchased by a person including manufacturers of cigarettes

0%

5%

Advance Tax

ADVANCE TAX ON REMITTANCE ABROAD THROUGH CREDIT, DEBIT OR PREPAID CARDS

[Sec. 236Y, Division XXVII Part IV First Schedule]

Gross amount remitted from abroad

1%

3%

Advance Tax

Table: Withholding Income Tax Rates

Customs

Goods imported and exported from Pakistan are liable to rates of Customs duties as prescribed in Pakistan Customs Tariff. Customs duties in the form of import duties and export duties constitute about 37% of the total tax receipts. The rate structure of customs duty is determined by a large number of socio-economic factors. However, the general scheme envisages higher rates on luxury items as well as on less essential goods. The import tariff has been given an industrial bias by keeping the duties on industrial plants and machinery and raw material lower than those on consumer goods.


Transportation Map Pakistan

Pakistan Customs

Federal Excise

Federal Excise duties are leviable on a limited number of goods produced or manufactured, and services provided or rendered in Pakistan. On most of the items Federal Excise duty is charged on the basis of value or retail price. Some items are, however, chargeable to duty on the basis of weight or quantity. Classification of goods is done in accordance with the Harmonized Commodity Description and Coding System which is being used all over the world. All exports are exempted from Federal Excise Duty.

Sales Tax

The following personnel shall make an application in the Form STR-1, transmitted to the CRO “Central Registration Office” electronically or through registered mail or courier services for registration under Sales Tax Rules, 2006, Chapter I “Registration, compulsory Registration and De-Registration” as per following conditions:

PERSON

CONDITION

LIABILITY
EXEMPTION

Manufacturer

Value of Taxable supplies does not exceed Rs. 5,000,000 in any period during the last twelve month or whose annual utility bills does not exceed Rs 600,000 during the last 12 months.

Supplies will be exempted under Sr. 42 of the Sixth Schedule.

Retailer

Value of supplies does not exceed Rs. 5,000,000 in any period during the last twelve month.

Supplies will be exempted under Sr. 42 of the Sixth Schedule.

Importer

Person is liable to be Registered.

Wholesaler / Supplier including Dealer and Distributor

Person is liable to be Registered.

Table: Sales Tax Liability Exemption

As per newly inserted Section 8B of the Act, a registered person is restricted to claim adjustment of input tax to the extent of ninety percent of output tax for that tax period. Further, it permits the adjustment of input charged in acquisition of fixed assets in twelve equal monthly installments after the start of production of a new unit. The Board is empowered to exclude any person from the above purview.

However, the input tax inadmissible in excess of 90% of the output tax, may be allowed on yearly basis in the second month following the end of the financial year of the registered person subject to the following condition namely:

  • In case of a registered person whose accounts are subject to audit under the Companies Ordinance, 1984 upon furnishing a statement along with annual audited accounts duly certified.

  • In other cases, adjustment may be allowed as per specific notification issued by the Board.

Time of Supply

Sales Tax was taxable at the earlier of the time of delivery of goods or when any payment is received by the supplier in respect of such supply. If has now been restricted only to the time of delivery of goods by the supplier irrespective of the actual time of payment.

Through newly inserted subsection (1A) of Section 23, the Board is empowered to restrict a registered person to use as many number of business bank accounts as may be specified.

As per amendment in Section 24 of the Act, retention of record and documents by a registered person has been enhanced from three years to five years.

A new concept of Withholding Agent has been introduced through SRO No 550(1)/2007, dated 30th June, 2007 wherein a withholding agent shall deduct as amount equal to one fifth (1/5th) of total sales tax shown in the sales tax invoice issued by the supplier and make payment of the balance amount to him.

Default Surcharge

  • For first six months 1% per month

  • For subsequent period till the final payment 1.5% per month

  • In case of tax fraud till the final payment 2% per month

Offences and Penalties

OFFENCES

PENALTIES

SECTION
REFRENCE

Non filing of returns

Five thousand rupees within fifteen days, one hundred rupees for each day of default

Sec. 26

Non issuance of invoices

Five thousand rupees of five percent of the amount which ever is higher

Sec. 23

Issuance of invoices without authority

Ten Thousand rupees or five percent of the amount which ever is higher

Sec. 3, 7 and 23

Non notification change in the particulars of registration

Five Thousand rupees

Sec. 14

Failure of deposit the amount of tax due

Ten Thousand rupees or five percent of the amount whichever is higher

Within fifteen days, give hundred rupees each day of default. No penalty for miscalculation.

Non payment and imprisonment for three year or both

Sec. 3, 6, 7 and 48

Repeation of miscalculation for less tax during the year

Ten Thousand rupees or three percent of the amount whichever is higher

Non filing of application registration

Ten Thousand rupees or five percent of the amount whichever is higher

Non filing after sixty days conviction and imprisonment for three years

Non maintenance of records

Ten Thousand rupees or five percent of the amount whichever is higher

Non compliance with Section 25

Five Thousand rupees

Sec. 25

Receipt of second notice

Ten Thousand rupees

Receipt of third notice

Fifteen Thousand rupees

Non filing of information required by the board

Ten Thousand rupees

Sec. 26

Filing of false documents

Destruction / alteration of record

Making of false statement

Twenty Five Thousand rupees or one hundred percent of the amount whichever is higher. Conviction and imprisonment of three years or with both

Sec. 2 (37) and General

Obstruction of Sales Tax Officer

Twenty Five Thousand rupees or one hundred percent of the amount whichever is higher. Conviction and imprisonment of three years or with both

Sec. 25, 38 and 38A

Abetment in commissioning of tax fraud

Twenty Five Thousand rupees or one hundred percent of the amount whichever is higher. Conviction and imprisonment of three years or with both

Sec. 2 (37)

Violation of any embargo placed or removal of goods in connection with recovery of tax

Twenty Five Thousand rupees or one hundred percent of the amount whichever is higher. Conviction and imprisonment of three years or with both

Sec. 48

Obstructions of Sales Tax Officer

Twenty Five Thousand rupees or one hundred percent or three percent of he amount whichever is higher

Sec. 31 and General

Non compliance with Section 73

Five thousand rupees or three percent of the amount whichever is higher

Sec. 73

Non fulfillment of notification issued under any of the provisions of this Act

Five Thousand Rupees of three percent of the amount whichever is higher

Sec. 71 and General

Sales Tax officer causing loss to the sales tax revenue

Convection and imprisonment for three year or five equal to tax, or with both

General

Contravention with provision of this act and no penalty has been provclassed

Five Thousand Rupees or three percent of the amount, which ever is higher

General

Non filing of the summary of sale or purchase invoices

Twenty Five Thousand Rupees

Sec. 26(5)

Table: Offences and Penalties

Sales Tax is levied at various stages of economic activity at the rate of 15 per cent on:

  • All goods imported into Pakistan, payable by the importers;

  • All supplies made in Pakistan by a registered person in the course of furtherance of any business carried on by him; and

  • There is an in-built system of input tax upto 90% adjustment and a registered person can make this adjustment of tax paid at earlier stages against the tax payable by him on his supplies. The tax paid at any stage does not exceed 15% of the total sales price of the supplies.

Performing a High Quality Audit

In today’s ever changing global economy, businesses need trusted advisers. Our audit specialists take the time to understand your business as well as the industry in which you operate, whether it is in Pakistan and / or abroad.

Our audit approach focuses on understanding the clients’ business and control issues from the inside out. It combines a rigorous risk assessment, diagnostic processes, and audit testing procedures as well as a continuous assessment of our clients’ service performance. Our state of the art, audit tool, Audit System supports all phases of the audit process including planning, executing, reporting.

Investment Advisory Services

All investment carries some risk and thus needs careful analysis and expert advice. The key to be a successful investor is to achieve appropriate risk/return trade off by identification of risks that exist and their proactive management.

Our Investment Advisory Service professionals specialize in identifying risks arising from regulation, competition and macro economic forces and designing strategies to manage it to your advantage. Our range of services includes:

  • Advice on analyzing investment prospects and mode of doing business in Pakistan including advising on the form of legal entity, incorporation, obtaining of necessary permissions and help in dealing with local regulators.

  • Identification of suitable business partners and conducting due diligence.

  • Feasibility studies including preparation of projected financial statements and project.

  • Appraisal through NPV, IRR, Payback and DCF analysis including cost assessment and revenue projections.

  • Sensitivity analysis

  • Tariff and pricing studies

NOTE:

The contents as narrative above are subject to change through annual amendment.


Our Core Competencies

1

Collaborative Skillset

Collaborative lawyers trust the wisdom of the group; lone wolves and isolationists do not do any good anymore.

2

Emotional Intelligence

Distant, detached lawyers are relics of the 20th century, the market no longer wants a lawyer who is only half a person.

3

Technological Affinity

If you can not effectively and efficiently use e-communications, and mobile tech, you might as well just stay home.

4

Time Management

Virtually a substantial part of lawyers difficulties in this regard lie with their inability to prioritise their time.


What People Say About Us

  • We are glad to inform you the receipt of current outstanding balance in our bank account from the disputed party. Therefore we request you to arrange to close the dispute case with them as per our management decision. We would like to take this opportunity to thank you for all the support and advice to solve this matter. It was pleasure working with you all.

    Rahul Meppad ~ Dubai, UAE
  • Thank you for your support in this process and for your great hospitality. Your assistance has been of great importance. It was also important to see and experience the high quality of your services and your well known firm.

    Magnus Greko ~ Sweden
  • Thank you for your support in this process. Your assistance has been invaluable. We are looking forward to a long lasting working relationship with you. Also, thank you for hospitality during these past days.

    Lothar Geilen ~ Germany
  • Dear Atty. Iram Fatima: I would like to let you know that my wife came in USA last week. The U.S. Embassy Islamabad approved her visa petition in the lights of all the wonderful endeavors done by you and Mr. Birach. It was a long legal battle of about 7 years. I must say that your law firm is one of the best in the country and you are a highly professional advocate. Dr. Zafar should feel proud to have you in his crew. Finally, again I would say Thanks for all your legal services and I am your best reference.

    Zubair Mufti ~ Texas, USA
  • Dear Dr Zafar and Iram: Thank you very much for timely submission of the excellent opinion letter. It is very well drafted and covers the key points. We very much appreciate your excellent and timely work in preparing the legal opinion.

    Mrs. Iqbal Farrukh ~ San Francisco, USA
  • Dear Attorney Iram Fatima: Thanks so much for all of your kind efforts in this area and I must admit that your legal firm is the best in the country.

    Zubair Mufti ~ Texas, USA
  • The efficiency and effectiveness of your services are much appreciated.

    James Alexander Linton Williams ~ UK
  • Many thanks for this, and thank you for being so prompt. It is very appreciated.

    Alex Gilchrist ~ Somerset, UK
  • Thank you again for handling my case so well, I am honoured to be represented by you.

    Yolanda Slabbert ~ Port Elizabeth, South Africa
  • Thank you very much for your great attention to my case, I see that you’re a very serious company and I’m happy that I’ve choose you.

    Sergio Lujan ~ Bogota, Colombia
  • I really appreciate the help and support provided by Zafar and Associates to our company. I don’t know what to say or how to thank you, but to tell the truth your services are really the best legal services we have ever received. You are truly a professional and effective law firm.

    Adnan Branbo ~ Dubai, UAE
  • Thank you very much for your contribution. We will review the information and incorporate it into the International Citation Manual of Washington University Global Studies Law Review. Your help is appreciated.

    Naomi Levin ~ Washington, USA
  • I wanted to let you know that i got the documents. And i wanted to thank you and the whole team who worked on my case. You all did a good job thanks again.

    Naima Ashraf ~ The Hague, Holland
  • Thank you very much for all the work you have done to ensure that the Death in Service benefit reaches the parents of the deceased. Are they expecting this money and do they understand where it is coming from? We appreciate your assistance and excellent work.

    Susan Bauer ~ London, UK
  • I have no words to express my gratitude to you. People like you are very rare and I have the priviledge to know one of those. May God shower all blessings on to you and your family. I am a small man with only prayers on my lips.

    Dr. Haridev Bhargava ~ Saratoga, USA
  • I must say your handling of this matter has been totally sterling and I shall not have any hesitation in recommending you and your firm to others.

    Rosina Ahmad ~ UK
  • Good morning, I received the documents back yesterday afternoon. Thank you so much for your quick response to the job. We really appreciate it. Looking forward to working with you in the further.

    Mrs. Jan Malcolm ~ Auckland, New Zealand
  • Thank you very much for the case. It is just brilliant! I am so grateful that you went out of your way to help me.”

    Loraine Bhan ~ Suva, Fiji
  • I do appreciate highly the sense of commitment your office wishes to dedicate to the follow up of our question for information. I have transmitted the contents of your email IMMEDIATELY to the contact, together with confirmation of the highest esteem we attribute to the quality of the services rendered by ZAFAR & ASSOCIATES.

    Paul Wouters ~ Istanbul, Turkey
  • Thank you very much for the information and good news. I know you’ve been working too hard and I appreciate every single minute working with you all. It’s an experience to be in the team of hardworking people and I am very proud to be included.

    Evangeline Williams ~ Paphos, Cyprus
  • I would like to thank you for your swift and excellent service that your office recently provided us. I would definitely forward your contact information to my friends and family in reference to seeking legal matters in Pakistan. I would also inform Sean Hogan and his associates to pass on your contact information to any clients that may need assistance in the matters of law in Pakistan.

    Zarar Khan ~ Miami, USA
  • We are greatly impressed with your firm and the professional calibre of the partners. If acceptable, we would like to keep your firm as a reference for future projects. Please let me know.

    Tanaz Pardiwala ~ Barcelona, Spain
  • We are happy to inform you that we have received the original succession certificate via DHL. I want to take this opportunity to thank you for your efforts, especially Dr. Zafar, who was kind enough to handle the security deposit at the court. With our best wishes and success for the New Year, to you and your esteemed team, we remain with.

    Mansur Asrar ~ Istanbul, Turkey
  • I am writing to convey to you how much I appreciate your prompt service! My mother called me today and informed me that 2 lawyers from your firm visited her. It is a pleasant surprise to know that such a law firm exists in our very own country. I would definitely recommend your firm to any friend who is in need of professional legal services in Pakistan.

    Naveed Ahmad ~ USA
  • I am truly very impressed with the follow up of your law firm. I never thought a Pakistani firm would be so aggressive and pro-active. Do you even happen to come to NYC? If so, then please look me up here when you visit next.

    Faisal Mumtaz ~ New York, USA
  • I want to thank you for all services you have rendered to us. I really appreciate it and hope on further cooperation.

    Petrov Andrey ~ Moscow, Russia
  • With God’s help you have done a great thing for our family. Thank you so much for your diligence and expertise. We are truly grateful to God for all that is possible now. We also are looking forward to meeting you and your staff when we arrive in Pakistan next month. Please let us know if there is anything we can bring for you from the United States as a gift.

    Shaukat Minhas and Colleen Davidson ~ Dallas, USA
  • Your help in investigation case is well appreciated. My brother and I are ever grateful to you for obtaining the document. Thank you and god bless you and your practice team.

    Kevin Lessani – Dallas – USA
  • I greatly appreciate that your law firm is very careful in its preparation of petitions. In fact, the outcome of a legal fight greatly depends on how effectively a law firm has presented its case. If it fails to conceive in advance as to what it will have to face in defense, it can not prepare an effective petition. I admire that ZAFAR & ASSOCIATES – LLP are very careful in their initial step i.e. to prepare petition, around which the whole legal battle is fought.

    M. Iftikhar Sheikh ~ Dhahran, Kingdom of Saudi Arabia
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10
  11. 11
  12. 12
  13. 13
  14. 14
  15. 15
  16. 16
  17. 17
  18. 18
  19. 19
  20. 20
  21. 21
  22. 22
  23. 23
  24. 24
  25. 25
  26. 26
  27. 27
  28. 28
  29. 29

Tax u/Sec. 153(8A) (omitted)

Now, where NTN/CNIC is not available, the excess tax @ 2% shall not be collected.