Compendium of Tax Laws in Pakistan: (Containing Bare-Acts Only)

Compendium Of Tax
Laws In Pakistan
(containing bare-acts only)
•Federal:
•Income Tax Ordinance, 2001:
Law concerning taxation of income in Pakistan is stated in the Income Tax Ordinance,
2001 (the Ordinance).
It’s a consolidation and amending Law consists of 13 chapters, 241 sections and 9
schedules.
It was promulgated on Sep 13th 2001 and became inactive on 1 st of July 2002.
The Ordinance is a Central statute and is, therefore, applicable to the whole of Pakistan.
•Heavy Reliance (53%) on Withholding Tax

•Progressive Personal Income Tax (max rate: 20-25%)
•Corporate Income Tax (35% rate)
•Universal Self-Assessment Scheme
Income Tax Rules, 2002:
The rules About IT framed under viz. Income Tax Rules, 2002 (the Rules).
FBR compiled these rules in exercise of it’s power according to Income

Tax Ordinance, 2001.
It consists of 29 chapters, 232 sections and 1 schedule with 14 parts.
It Became active on 1st of July 2002.

INCOME TAX LAWS:
Tax rates
 Under section 4 of the Ordinance, income tax is imposed for each tax
year at specified rates on every person who has taxable income for the
year.
 Tax rates for the salaried class in Pakistan are 0.5% to 20%, and for
other taxpayers, 0.5% to 25%.
 Basis – Income tax is payable by salaried individuals if taxable income

exceeds 4,00,000 Rupees
The limit not chargeable to tax for Tax Year 2019 is: Rs. 4,00,000.
Income Tax Slabs :
As per income tax exemption bill passed by Government of Pakistan, following slabs and income tax
rates will be applicable for salaried persons for the year 2018-2019 :
TAX RATES FOR SALARIED INDIVIDUALS & ASSOCIATION OF PERSONS

(AOPS)
Income Tax Slabs Financial Year 2018-2019
Fixed Amount Income Tax Rate
No. Lower Limit Upper Limit
Addition (%)
1 0 400,000 0 0.00
2 400,001 800,000 1,000 0.00
3 800,001 1,200,000 2,000 0.00
4 1,200,001 2,400,000 0 5.00
5 2,400,001 4,800,000 60,000 10.00
6 4,800,001 10,000,000,000 300,000 15.00
• Penalties:
• The penalty for failure to file a tax return is 0.1% of the amount of the tax payable for
each day of default.
• The minimum penalty is Rs. 500 and the maximum is 25% of the amount of tax payable.
• Recovery of IT (Chapter 16 OF ITR,2002):

If an AOP does not pay income tax even with penalty under certain time frame or
earns “Black Money”, it becomes “defaulter” of FBR. Following procedure is to
follow to recover IT.
• Notice forming
Time Limit
Execution (Arresting the defaulter)
Investigation by the Commissioner
Warrant issue
Detention sentenced by the Commissioner
SALES TAX LAWS IN PAKISTAN:
General Sales Tax - Sales Tax Act, 1990:
It consists of 10 chapters, 75 chapters and 9 schedules.
• On Goods only
• RGST (VAT) features
• Zero Rating, also of domestic sales of exporters
• Standard Rate of 17%
• Exemptions to basic food items, agricultural inputs, medicines, newsprint.
Sales Tax Rules, 2006 and Sales Tax Special Procedure Rules, 2007 are
also being carried out in Pakistan.
SALES TAX LAW
• Sales Tax - Sales Tax Act, 1990:
• Consumption tax charged at the point of purchase for

certain goods and services
• The tax amount is usually calculated by applying

a percentage rate to the taxable price of a sale
• Collected from the buyer by the seller
• Commonly charged on sales of goods and

services
Other Laws and Acts:
• Custom Duty – Customs Act 1969 :
• Cascaded Tariff Structure (max rate: 25%; six slabs)

• Tariff Peaks in Automobiles and other luxury goods
• Share of Dutiable Imports (51%)
• Excise Duties - Federal Excise Act 2005 :
• On few industries like cigarettes, beverages and cement.

• On Services in VAT mode
• 1% Excise Duty across-the-board on manufacturing and import
Provincial Taxes:
• Punjab Sales Tax On Services Act, 2012
Punjab Sales Tax On Services Rules, 2012
Punjab Sales Tax On Services Rules, 2014.
 Professional Tax  Punjab Airport Tax
 Property Tax  Provincial Excise Duty
 Vehicle Tax  Cessation on Hotels
 Stamp Duty  Cotton Fees
 Entertainment Tax  Paddy Development Cessation
 Betterment Tax  Provincial Excise Duty
 Social Security Contribution  Land Revenue Tax
 Provincial Education Cess  Employee Old Age Benefit
 Capital Gain Tax Contribution

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Compendium Of Tax

•Heavy Reliance (53%) on Withholding Tax

FBR compiled these rules in exercise of it’s power according to Income

It consists of 29 chapters, 232 sections and 1 schedule with 14 parts.

It Became active on 1st of July 2002.

 Basis – Income tax is payable by salaried individuals if taxable income

TAX RATES FOR SALARIED INDIVIDUALS & ASSOCIATION OF PERSONS

• Recovery of IT (Chapter 16 OF ITR,2002):

• Consumption tax charged at the point of purchase for

• The tax amount is usually calculated by applying

• Collected from the buyer by the seller

• Commonly charged on sales of goods and

• Cascaded Tariff Structure (max rate: 25%; six slabs)

• Excise Duties - Federal Excise Act 2005 :

• On few industries like cigarettes, beverages and cement.

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