Navigating Pakistan’s tax system requires understanding not just the rates but also their legal foundations. This complete guide includes all official Section, Schedule, and Division references from the Income Tax Ordinance, 2001, giving you the authoritative information you need for compliance and planning.
1. Tax Rates for Salaried Persons (Section 12, 149, First Schedule, Part-I, Division-I)
| Taxable Income (Rs) | Tax Calculation |
|---|---|
| 0 – 600,000 | 0% |
| 600,001 – 1,200,000 | 1% of excess over 600,000 |
| 1,200,001 – 2,200,000 | Rs. 6,000 + 11% of excess over 1,200,000 |
| 2,200,001 – 3,200,000 | Rs. 116,000 + 23% of excess over 2,200,000 |
| 3,200,001 – 4,100,000 | Rs. 346,000 + 30% of excess over 3,200,000 |
| 4,100,001+ | Rs. 616,000 + 35% of excess over 4,100,000 |
Director Fee for Board Meeting: 20% of Gross Amount
2. Tax Rate for Pensioners (Age below 70 years)
| Pension Amount | Tax Rate |
|---|---|
| Up to Rs. 10 million | 0% |
| Exceeding Rs. 10 million | 5% of excess amount |
3. Tax Rates for AOPs and Non-Salaried Persons (Section 18, First Schedule, Part-I, Division-I)
| Taxable Income (Rs) | Tax Calculation |
|---|---|
| 0 – 600,000 | 0% |
| 600,001 – 1,200,000 | 15% of excess over 600,000 |
| 1,200,001 – 1,600,000 | Rs. 90,000 + 20% of excess over 1,200,000 |
| 1,600,001 – 3,200,000 | Rs. 170,000 + 30% of excess over 1,600,000 |
| 3,200,001 – 5,600,000 | Rs. 650,000 + 40% of excess over 3,200,000 |
| 5,600,001+ | Rs. 1,610,000 + 45%* of excess over 5,600,000 |
**40% for professional firms prohibited from incorporating*
4. Surcharge on Tax Payable (Section 4AB, First Schedule, Part-I, Division-I)
Applicability: Taxable income of Individuals and AOPs exceeding Rs 10M
Rate: 9% on tax payable
5. Rates of Tax for Companies (Sections 18, 100A, 113C, First Schedule, Part-I, Division-II)
| Company Type | Tax Rate |
|---|---|
| Small Company | 20% |
| Banking Company | 39% |
| All Other Companies | 29% |
| Alternate Corporate Tax | 17% |
6. Super Tax on High Earning Persons (Section 4C, First Schedule, Part-I, Division-IIB)
| Income Bracket (Rs) | Tax Rate |
|---|---|
| 0 – 150 Million | 0% |
| 150M – 200M | 1% of total income |
| 200M – 250M | 1.5% of total income |
| 250M – 300M | 2.5% of total income |
| 300M – 350M | 3.5% of total income |
| 350M – 400M | 5.5% of total income |
| 400M – 500M | 7.5% of total income |
| 500M+ | 10% of total income |
7. Rate of Dividend Tax (Section 5, First Schedule, Part-I, Division-III)
| Source | Tax Rate |
|---|---|
| IPPs | 7.5% |
| Real Estate Investment Trusts | 15% |
| Mutual Funds (Debt Securities) | 25% |
| Mutual Funds (Equities) | 15% |
| Tax-Exempt/Loss Companies | 25% |
| Corporate from Mutual Funds (Debt) | 29% |
8. Rate of Tax on Profit on Debt (Section 7B, First Schedule, Part-I, Division-IIIA)
| Type | Tax Rate |
|---|---|
| Banking/Financial Institutions (≤5M) | 20% |
| Government Securities – Company/AOP (≤5M) | 20% |
| Government Securities – Individual (≤5M) | 15% |
| Other Cases (≤5M) | 15% |
| All Cases (>5M) | Normal Tax Regime |
9. Rate of Tax on Return on Investment in Sukuks (Section 5AA, First Schedule, Part-I, Division-IIIB)
| Investor Type | Tax Rate |
|---|---|
| Company | 25% |
| Individual/AOP (Return >1M) | 12.5% |
| Individual/AOP (Return ≤1M) | 10% |
10. Rate of Tax on Certain Payments to Non-Residents (Section 6, First Schedule, Part-I, Division-IV)
| Payment Type | Tax Rate |
|---|---|
| Royalty/Technical Services | 15% |
| Any Other Case | 10% |
11. Rate of Tax on Payments for Digital Transactions in E-commerce Platforms (Section 6A, First Schedule, Part-I, Division-IVA)
| Payment Method | Tax Rate |
|---|---|
| Digital/Banking Channels | 1% of gross amount |
| Cash on Delivery | 2% of gross amount |
12. Rate of Tax on Shipping or Air Transport Income of Non-resident Person (Section 7, First Schedule, Part-I, Division-V)
| Business Type | Tax Rate |
|---|---|
| Shipping Companies | 8% of gross receipts |
| Air Transport | 3% of gross receipts |
13. Rate of Tax on Capital Gains on Disposal of Securities (Section 37A, First Schedule, Part-I, Division-VII)
Securities Acquired 07/2022-06/2024
| Holding Period | Tax Rate |
|---|---|
| ≤ 1 year | 15% |
| 1-2 years | 12.5% |
| 2-3 years | 10% |
| 3-4 years | 7.5% |
| 4-5 years | 5% |
| 5-6 years | 2.5% |
| > 6 years | 0% |
| Future Commodity Contracts | 5% |
14. Rate of Tax on Capital Gains on Disposal of Immovable Property (Section 37(1A), First Schedule, Part-I, Division-VIII)
Properties Acquired after 07/2024
| Holding Period | Open Plots | Built Property | Flats |
|---|---|---|---|
| ≤ 1 year | 15% | 15% | 15% |
| 1-2 years | 12.5% | 10% | 7.5% |
| 2-3 years | 10% | 7.5% | 0% |
| 3-4 years | 7.5% | 5% | – |
| 4-5 years | 5% | 0% | – |
| 5-6 years | 2.5% | – | – |
| > 6 years | 0% | – | – |
15. Rate of Tax on Deemed Income (Section 7E, First Schedule, Part-I, Division-VIIIC)
Tax on Deemed Income: 20%
16. Minimum Turnover Tax (Section 113, First Schedule, Part-I, Division-IX)
| Business Type | Tax Rate |
|---|---|
| SSGPL/SNGPL (>1B), PIA, Poultry | 0.75% |
| Oil Refineries, OMCs, Motorcycle Dealers | 0.5% |
| Pharma/FMCG Distributors, Rice/Flour Mills | 0.25% |
| All Other Cases | 1.25% |
17. Rate of Advance Tax on Construction Business (Section 147, First Schedule, Part-II)
Commercial Buildings
| Area | Rate per Sq. ft. |
|---|---|
| Karachi, Lahore, Islamabad | Rs. 250 |
| Other Major Cities | Rs. 230 |
| Other Urban Areas | Rs. 210 |
Residential Buildings
| Size | Karachi, Lahore, Islamabad | Other Major Cities | Other Urban Areas |
|---|---|---|---|
| ≤ 3000 sq. ft. | Rs. 80/sq. ft. | Rs. 65/sq. ft. | Rs. 50/sq. ft. |
| ≥ 3000 sq. ft. | Rs. 125/sq. ft. | Rs. 110/sq. ft. | Rs. 100/sq. ft. |
18. Withholding Tax Rates for Tax Year 2025-26
Rate of Advance Tax at Import Stage (Section 148, First Schedule, Part-II)
| Goods Classification | Tax Rate |
|---|---|
| Part I, Twelfth Schedule | 1% |
| Part II, Twelfth Schedule | 2% |
| Part II (Commercial Importer) | 3.5% |
| Part III, Twelfth Schedule | 5.5% |
| Part III (Commercial Importer) | 6% |
| Pharmaceutical Finished Goods | 4% |
| Electric Vehicle CKD Kits | 1% |
*100% increase for non-ATL persons*
Rate of Advance Tax on Import of Mobile Phones (Section 148, First Schedule, Part-II)
| C&F Value (USD) | CBU | CKD/SKD |
|---|---|---|
| $0-30 (non-smart) | Rs. 70 | 0 |
| $30-100 (all phones) | Rs. 100 | 0 |
| $100-200 | Rs. 930 | 0 |
| $200-350 | Rs. 970 | 0 |
| $350-500 | Rs. 5,000 | Rs. 3,000 |
| $500+ | Rs. 11,500 | Rs. 5,200 |
Rate of Dividend Tax (Section 150, First Schedule, Part-I, Division-III)
| Source | Tax Rate |
|---|---|
| IPPs | 7.5% |
| Real Estate Investment Trusts | 15% |
| Mutual Funds (Debt Securities) | 25% |
| Mutual Funds (Equities) | 15% |
| Tax-Exempt/Loss Companies | 25% |
| Others from Mutual Funds (Debt) | 25% |
| Corporate from Mutual Funds (Debt) | 29% |
| REIT Scheme from SPV | 0% |
| Others from SPV | 35% |
*100% increase for non-ATL persons*
Profit on Debt (Section 151, First Schedule, Part-III, Division-IA & IB)
| Type | Tax Rate |
|---|---|
| Banking/Financial Institutions (≤5M) | 20% |
| Government Securities – Company/AOP (≤5M) | 20% |
| Government Securities – Individual (≤5M) | 15% |
| Other Cases (≤5M) | 15% |
| All Cases (>5M) | Normal Tax |
Payments to Non-residents (Section 152, First Schedule, Part III, Division II)
| Payment Type | Tax Rate |
|---|---|
| Royalty/Technical Services | 15% |
| Contracts/Construction/Services | 7% |
| Insurance/Reinsurance Premium | 5% |
| Foreign Advertisement Services | 10% |
| Foreign Commercials | 20% |
| Offshore Digital Services | 15% |
Payments for Goods, Services & Contracts (Section 153, First Schedule, Part III, Division III)
| Supply/Service Type | Tax Rate |
|---|---|
| Rice, Edible Oils | 1.5% |
| Toll Manufacturing – Company | 9% |
| Toll Manufacturing – Individual/AOP | 11% |
| General Supplies – Company | 5% |
| General Supplies – Individual/AOP | 5.5% |
| FMCG Distributors (ATL) | 0.25% |
| Transport, IT, Engineering Services | 8% |
| IT & IT Enabled Services | 4% |
Exports of Services (Section 154 & 154A, First Schedule, Part III, Division IV & IVA)
| Export Type | Tax Rate |
|---|---|
| Goods Export | 2% |
| IT/Software Services (PSEB) | 0.25% |
| Other Services | 1% |
Income from Property (Section 155, First Schedule, Part-III, Division-V)
| Annual Rent (Rs) | Tax Calculation |
|---|---|
| 0 – 300,000 | 0% |
| 300,001 – 600,000 | 5% of excess over 300,000 |
| 600,001 – 2,000,000 | Rs. 15,000 + 10% of excess over 600,000 |
| 2,000,001+ | Rs. 155,000 + 25% of excess over 2,000,000 |
Companies: 15% of gross rent
*100% increase for non-ATL persons*
Sale of Petroleum Products (Section 156A, First Schedule, Part III, Division VIA)
Rate: 12%
*100% increase for non-ATL persons*
Cash Withdrawals from Bank (Section 231AB, First Schedule, Part IV)
Non-ATL persons: 0.8% on withdrawals > Rs 50,000/day
Prizes and Winnings (Section 156, First Schedule, Part III, Division VI)
| Type | Tax Rate |
|---|---|
| Prize Bonds | 15% |
| Lottery/Raffle Winnings | 20% |
| *100% increase for non-ATL persons* |
Advance Tax on Motor Vehicles (Section 231B, First Schedule, Part IV, Division VII)
Purchase/Registration (Value-based)
| Engine Capacity | Tax Rate |
|---|---|
| 0-850cc | 0.5% of value |
| 851-1000cc | 1% of value |
| 1001-1300cc | 1.5% of value |
| 1301-1600cc | 2% of value |
| 1601-1800cc | 3% of value |
| 1801-2000cc | 5% of value |
| 2001-2500cc | 7% of value |
| 2501-3000cc | 9% of value |
| 3000cc+ | 12% of value |
Foreign Domestic Workers (Section 231C)
Rate: Rs. 200,000
*100% increase for non-ATL persons*
Brokerage and Commission (Section 233, First Schedule, Part IV, Division II)
| Type | Tax Rate |
|---|---|
| Advertisement Agents | 10% |
| Life Insurance Agents (<0.5M) | 8% |
| Others | 12% |
| *100% increase for non-ATL persons* |
Tax on Motor Vehicle (Section 234, First Schedule, Part IV, Division III)
Annual Tax on Private Vehicles
| Engine Capacity | Tax Rate |
|---|---|
| 0-1000cc | Rs. 800 |
| 1001-1199cc | Rs. 1,500 |
| 1200-1299cc | Rs. 1,750 |
| 1300-1499cc | Rs. 2,500 |
| 1500-1599cc | Rs. 3,750 |
| 1600-1999cc | Rs. 4,500 |
| 2000cc+ | Rs. 10,000 |
Electricity Consumption (Section 235, First Schedule, Part IV, Division IV)
| Consumer Type | Tax Rate |
|---|---|
| Domestic (>Rs. 25,000) | 7.5% of bill |
| Commercial | Slab-based: 10-12% |
| Industrial | Slab-based: 5% above Rs. 20,000 |
Telephone and Internet (Section 236, First Schedule, Part IV, Division V)
| Service | Tax Rate |
|---|---|
| Mobile/Internet/Prepaid | 15% of amount |
| Landline (>Rs. 1,000) | 10% of excess amount |
Sale by Auction (Section 236A, First Schedule, Part IV, Division VIII)
| Item | Tax Rate |
|---|---|
| Goods/Property | 10% of sale price |
| Immovable Property | 5% of sale price |
| *100% increase for non-ATL persons* |
Sale or Transfer of Immovable Property (Section 236C, First Schedule, Part-IV, Division X)
| Consideration | Rate | Late Filer |
|---|---|---|
| ≤ Rs. 50M | 4.5% | 7.5% |
| Rs. 50M – 100M | 5% | 8.5% |
| > Rs. 100M | 5.5% | 9.5% |
| *Non-ATL: 11.5%, Non-Filer: 10%* |
TV Plays and Advertisements (Section 236CA, First Schedule, Part-IV, Division XA)
| Item | Tax Amount |
|---|---|
| Foreign TV Drama (per episode) | Rs. 1,000,000 |
| Foreign TV Play (single) | Rs. 3,000,000 |
| Foreign Actor Ad (per second) | Rs. 100,000 |
Functions and Gatherings (Section 236CB, First Schedule, Part-IV, Division XI)
Rate: 10%
Sales to Distributor, Dealer & Wholesalers (Section 236G, First Schedule, Part-IV, Division XIV)
| Recipient Status | Tax Rate |
|---|---|
| On Both ATLs | 0.25% |
| Other than Fertilizer | 0.1% |
| *Non-ATL: 0.7% (fertilizer), 2% (others)* |
Sales to Retailers (Section 236H, First Schedule, Part-IV, Division XIV)
Rate: 0.5%
*500% increase for non-ATL persons*
Purchase of Immovable Property (Section 236K, First Schedule, Part-IV, Division XVIII)
| Market Value | Normal | Non-ATL | Late Filer |
|---|---|---|---|
| ≤ Rs. 50M | 1.5% | 10.5% | 4.5% |
| Rs. 50M – 100M | 2% | 14.5% | 5.5% |
| > Rs. 100M | 2.5% | 18.5% | 6.5% |
Amount Remitted Abroad (Section 236Y, First Schedule, Part-IV, Division XXVII)
Rate: 5%
*100% increase for non-ATL persons*
Bonus Shares Issued by Companies (Section 236Z)
Rate: 10%
*100% increase for non-ATL persons*
🤔 Frequently Asked Questions (FAQs)
1. Why are section references important in tax matters?
Section references provide the legal authority for each tax rate and help in accurate compliance, documentation, and any correspondence with the FBR.
2. Where can I find the official text of these sections?
The complete Income Tax Ordinance, 2001 is available on the Federal Board of Revenue (FBR) website.
3. What’s the difference between the First Schedule and other schedules?
The First Schedule contains most of the substantive tax rates, while other schedules like the Twelfth Schedule contain specific lists (like import goods classifications).
4. How do I know which Division applies to my situation?
Divisions are organized by type of income (e.g., Division-I for individuals, Division-II for companies). Your tax advisor can help identify the correct division.
5. Are these section references updated for the 2025-26 tax year?
Yes, all references reflect the current legislation as per the Finance Act, 2025.
6. What happens if I quote the wrong section in my tax filing?
While minor errors may be corrected, quoting incorrect sections could lead to processing delays or incorrect tax assessments.
7. Can tax rates in the same section have different effective dates?
Yes, some sections may have provisions that take effect at different times, as seen in capital gains tax transitions.
8. How often do section numbers change?
Section numbers generally remain stable, but their content is amended annually through the Finance Act.
9. Where can I get help understanding these legal references?
A qualified tax professional or the FBR’s helpline can provide guidance on interpreting specific sections.
10. Are all tax rates contained in the First Schedule?
Most substantive rates are in the First Schedule, but some procedural and administrative aspects are covered in the main Ordinance text.
11. What does “Division” refer to in these headings?
Divisions are sub-parts within the Schedules that categorize different types of taxpayers or income.
12. How current is this section information?
This guide reflects all changes made through the Finance Act, 2025 for Tax Year 2025-26.
13. Can sections be amended during the tax year?
Typically, tax laws are amended annually through the Finance Bill, but supplementary legislation can sometimes make mid-year changes.
14. Where are the Twelfth Schedule import classifications published?
The complete Twelfth Schedule is published as part of the Income Tax Ordinance and available on the FBR website.
15. Do I need to memorize these section numbers?
No, but understanding the relevant sections for your transactions helps in proper compliance and documentation.
16. How are new sections added to the tax law?
New sections are added through annual Finance Acts or occasional amendment ordinances.
17. What’s the most important section for salary taxpayers?
Section 12 and the related First Schedule, Part-I, Division-I contain the core provisions for salaried individuals.
18. Where can I find rules about tax deductions and credits?
These are typically found in the main body of the Income Tax Ordinance, outside the Schedules.
19. How do I reference these sections in my tax return?
Your tax professional can guide you on proper legal referencing in official documents.
20. Are there any mobile apps that provide this section information?
Several tax compliance apps and the FBR’s own systems include section references, but always verify against the official Ordinance.
