Income Tax Rates-First Schedule

INCOME TAX RATES-FIRST SCHEDULE

INCOME TAX RATES First Schedule

The complete Income Tax rates prescribed under the First Schedule to the Income Tax Ordinance, 2001
are presented below. Changes made through the Finance Act, 2026 are highlighted in red to facilitate
easy identification of the amendments.

Rates of Tax for Salaried Individuals 1st Schedule Part 1, Division I

The rates for salaried individuals where salary income exceeds seventy-five percent are as follows
effective from July 2026

[Link] Taxable income Tax Rate

1 0 to Rs. 600,000 0%
2 Rs.600,001 to Rs. 1,200,000 1% of the amount exceeding Rs. 600,000
3 Rs.1,200,001 to Rs.2,200,000 Rs. 6,000 + 11% of the amount exceeding Rs. 1,200,000
4 Rs.2,200,001 to Rs.3,200,000 Rs. 116,000 + 20% of the amount exceeding Rs. 2,200,000
5 Rs.3,200,001 to Rs.4,100,000 Rs. 316,000 + 25% of the amount exceeding Rs. 3,200,000
6 Rs.4,100,000 to Rs.5,600,000 Rs. 541,000 + 29% of the amount exceeding Rs. 4,100,000
7 Rs.5,600,000 to Rs.7,000,000 Rs. 976,000 + 32% of the amount exceeding Rs. 5,600,000
8 Exceeding Rs.7,000,000 Rs. 1,424,000 + 35% of the amount exceeding Rs. 7,000,000
Few Important Notes:
• Above rates are for salaried individuals whose income from salary is 75% or more of all sources
of income of a taxpayer.
• Every Employer or payer of salary is required to deduct tax and deposit in Govt Treasury. Sala-
ries above Rs.32,000 are required to be paid through banking channels. Where salaries are paid
without deduction/payment of tax or other than through banking channel, such amounts shall
be inadmissible deduction for employers.
• Salary is taxed on a receipt basis; salary receivable is not included in taxable income during the
year. For more details Section 12, 13 and 14 and relevant rules are referred.
• Above rates are for determination of tax liability of a salaried individual and also for withholding
of tax by employer or payer of salary u/s 149. Tax to be deduced on each payment of salary at
average tax rate to be computed on the basis of the annual estimated income of the employee.
• The pension of an individual who continues to work for a former employer or its associates shall
be charged tax under the head salary.
• Tax is deductible u/s 149 for payment of pension to a former employee who is below the age of
70 years and deriving pension income exceeding Rs.10m as per rates schedule for pension in-
come.
• Tax is computed on annual salary income and withholding of tax is made on the average rate on
monthly salary while making the payment.
• Where any amount is received on termination of employment, whether paid voluntarily or un-
der an agreement, including any compensation for redundancy or loss of employment and gold-
en handshake payments, an employee in a tax year may, by notice in writing to the Commis-

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 Income Tax Rates-First Schedule
sioner, elect for the amount to be taxed at the rate computed on average rate for the last three
years. (Ref Section 12(6).
• Where any amount is paid to an employee in arrears and as a result tax fall in higher slab, then
employee may, by notice in writing to the Commissioner, elect for the amount to be taxed at
the rates of tax that would have been applicable if the Salary had been paid to the employee in
the tax year in which the services were rendered. (Ref Section 12(7)
• Under section 149, every employer or payer of salary is a withholding agent and is obliged to
withhold tax while making payment of salary as per above rates. However, Employer is allowed
to adjust tax withheld which is adjustable under other heads and tax credits under sections 61,
63 and 63A adjust any excess or less deduction during the year.
• Deductible Allowance for educational expenses u/s 60D may also be adjusted where appliable.
• As per clause (139) of Part I of the Second Schedule to the ITO,2001, exemption provided for any
medical allowance received by an employee not exceeding ten per cent of the basic salary of the
employee if free medical treatment or hospitalization or reimbursement of medical or hospitali-
zation charges is not provided for in the terms of employment.
• Through Finance Act 2025 the rate of surcharge has been reduced from 10% to 9% in case of in-
dividuals deriving income from salary. Now the surcharge has been abolished in case of persons
deriving income from salary from tax year 2027 onward.
• Every person responsible for making payment of directorship fee or fee for attending board
meeting or such fee by whatever name called, shall at the time of payment deduct tax at the
rate of 20% of the gross amount payable- Refer subsection (3) of section 149.
Pervious rates for salary income exceeds seventy-five percent of individual’s taxable income –
[Link] Taxable income Tax Rate
1 0 to Rs. 600,000 0%
2 Rs.600,001 to Rs. 1,200,000 1% of the amount exceeding Rs. 600,000
3 Rs.1,200,001 to Rs.2,200,000 Rs. 6,000 + 11% of the amount exceeding Rs. 1,200,000
4 Rs.2,200,001 to Rs.3,200,000 Rs. 116,000 + 23% of the amount exceeding Rs. 2,200,000
5 Rs.3,200,001 to Rs.4,100,000 Rs. 346,000 + 30% of the amount exceeding Rs. 3,200,000
6 Exceeding Rs. 4,100,000 Rs. 616,000 + 35% of the amount exceeding Rs. 4,100,000
10% of surcharge would also be payable by salaried individuals whole annual income exceeds
Rs.10million u/s 4AB.

Rates of Tax for Individuals and AOPs 1st Schedule Part 1, Division I
Current Rates for Individuals and AOPs

Sr. No Taxable income Tax Rate

1 Rs. 0 to Rs. 600,000 0%
2 Rs. 600,001 to Rs. 1,200,000 15% of the amount exceeding Rs. 600,000
3 Rs. 1,200,001 to Rs. 1,600,000 Rs. 90,000 + 20% of the amount exceeding Rs. 1,200,000
4 Rs.1,600,001 to Rs. 3,200,000 Rs. 170,000 + 30% of the amount exceeding Rs. 1,600,000
5 Rs. 3,200,001 to Rs. 5,600,000 Rs. 650,000 + 40% of the amount exceeding Rs. 3,200,000
6 Exceeding Rs. 5,600,000 Rs. 1,610,000 + 45% of the amount exceeding Rs. 5,600,000

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 Income Tax Rates-First Schedule
Provided that in case of an association of persons that is a professional firm prohibited from incorporat-
ing by any law or rules of the body regulating their profession, the 45% rate of tax mentioned against
serial number 6 of the table shall be 40%.
For every individual including salary individual and Association of Persons (AOP), whose taxable income
for the year exceeds Rs. 10 million, a surcharge shall be payable @ 10% of the income tax chargeable on
their taxable income u/s 4AB.

Few Important Notes:

• Above rates are applicable on taxable income of individuals and AOPs having income other than
which is subject to final taxation or subject to separate block of taxation.
• Taxable income is computed as gross income less admissible deductions i.e. in case of income
from property deductions u/s 15A and in case of business income legitimate expenses under
sections 20 to 23. Incomes exempt under the law as provided are excluded from taxable income.
• Before computing net income, income is further reduced by deductible allowances permissible
under the law.
• Tax rates are applied on taxable income as above except any reduced rates are available for any
income or class of income under part II of the Second Schedule to the ITO 2001
• If taxable income exceeds Rs.10 million surcharge u/s 4AB shall also be appliable.
• Then tax liability is reduced by tax credits available under difference provisions of the law. (Sec-
tion 61 to Section 65G as may be applicable)
• Tax liability may be further reduced if provision is available for reduction in tax liability for any
income, class of income, any person, class of persons under part III of the Second Schedule to
the ITO 2001.
• Taxes withheld which are adjustable or minimum by nature under different provisions are to be
adjusted against final liability computed as above.
Rates of Tax for Pensioners 1st Schedule Part 1, Division I
In Budget 2025-26, it is amended to impose tax on individuals of age less than 70 years whose income is
from pension, annuity, supplement to the pension or annuity and commutation of pension from former
employer for tax year. The tax will be applied as per the rates given in the following table.
Sr.# Description Rate of Tax
1 0 to Rs. 10,000,000 0%
2 Exceeding Rs. 10,000,000 5% of the amount exceeding Rs. 10,000,000
Clause (2A) in Section 12 (tax on income under the head “salary”) has been added through Finance Act
2025 whereby it is provided that the pension or annuity shall be charged to tax as Final Tax at rates men-
tioned in the first schedule where the amount received by an individual from a former employer for a
tax year exceeds Rs.10million and the individual who has attained the age of 70 years shall not be
charged to tax on pension income and tax is deductible u/s 149 by any person responsible for paying
pension to such a former employee.

The pension of an individual who continues to work for a former employer or its associates shall be
charged tax at the rate specified under clause (1) or (2) of division I of Part I of the First Schedule, which
means normal rate would apply.

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 Income Tax Rates-First Schedule
Rates of Tax for Companies 1st Schedule Part 1, Division II

The rate for companies for TY-2021 & onward.

Nature of Company Rates
Companies other than banking companies 29%
Banking Companies
For TY 2025, 44%
For TY 2026 and 43%
For TY 2027 onward 42%
Small Company 20%
Few Important Notes:
• *Small company defined under clause (59AB) of Section 2.
a. a company registered on or after 1st July 2005,
b. has paid up capital plus undistributed reserves not exceeding Rs.50 million
c. number of employees not exceeding 250
d. Turnover not exceeding Rs.250 million
e. is not formed by the splitting up or the reconstitution of company already in existence
f. is not a small and medium enterprise as defined in clause (59A)
• Rules for Banking Companies are prescribed in the Seventh Schedule to the ITO, 2001
• Minimum Tax u/s 113 and Alternative Corporate Tax u/s 113C to be considered before determi-
nation of tax liability.
• For Banking Companies, the rate shall be effective from December 29, 2024 with the condition
that it shall not affect transactions which are past and closed.

Super Tax for rehabilitation of temporarily dis- Part 1, Division IIA (Section 4B)
placed persons.―

Inserted via FA 2015 and lastly amended by Finance Supplementary (second amendment) Act 2019.
Person Rate (%age of Income)
TY 2018 TY 2019 TY 2020 TY 2021 and 2022
Banking company 4% 4% 4% 4%
Person, other than banking, having income 3% 2% 0% 0%
equal to or Exceeding Rs.500 million

Super Tax on high earning persons Part 1, Division IIB (Section 4C)
Rate under section 4C
[Link]. Income under section 4C and person Rate of Tax

1. Income of a banking company exceeding Rs. 150 million 10% of the income

2. Income of a person, whose income is computed as per Part I of 10% of the income
the Fifth Schedule (Profits and Gains from the exploration and
Production of Petroleum), exceeding Rs. 150 million, so far as it
does not exceed the limit specified in rule 4 of that Part

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 Income Tax Rates-First Schedule
3 Income of a person, engaged in deriving income from sale of 10% of the income
any kind of fertilizer, exceeding Rs. 150 million.
4 Income of a person other than those mentioned in S. No.1, 2 and 8% of the income
3, exceeding Rs. 500 million

Through FA 2025 super tax on banking, petroleum and fertilizer sector having income exceeding Rs.150
million will be 10% and threshold of Rs.150 million for applicability of super tax other than these sectors
be enhanced to Rs.500 million and rate for such persons to be decreased from 10% to 8%.

Pervious Rates of Super Tax for all are as follows;

Income under section 4C TY- 2026

Where income does not exceed Rs. 150,000,000 0% of the income

Rs. 150,000,001 to Rs. 200,000,000 1% of the income
Rs. 200,000,001 to Rs. 250,000,000 1.5% of the income
Rs. 250,000,001 to Rs. 300,000,000 2.5% of the income
Rs. 300,000,001 to Rs. 350,000,000 3.5% of the income
Rs. 350,000,001 to Rs. 400,000,000 5.5% of the income
Rs. 400,000,001 to Rs. 500,000,000 7.5% of the income
Where income exceed Rs. 500,000,000 10% of the income

Tax on Deemed Income Part I, Division VIIIC (Section 7E)

OMITTED
Consequent to the recent Judgement of the Constitution Court declaring tax on deemed income under
section 7E to be ultra vires, it is made through the Finance Act, 2026, to omit Section 7E and Division
VIIIC of Part I of the First Schedule.

Minimum Tax Part I, Division IX (Section 113)

S.#. Persons Rates

1. (a) Oil marketing companies, Sui Southern Gas Company Limited, and Sui Northern
Gas Pipelines Limited (for the cases where annual turnover exceeds rupees one bil-
lion.)
0.75%
(b) Pakistani International Airlines Corporation; and
(c) Poultry industry including poultry breeding, broiler production, egg production,
and poultry feed production.
2. (a) Oil refineries,
(b) Motorcycle dealers registered under the Sales Tax Act, 1990 0.5%
(C) Oil marketing companies

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 Income Tax Rates-First Schedule
3. (b) Petroleum agents and distributors who are registered under the Sales Tax Act,
1990;
(c) Rice mills and dealers;
(d) Tier-1 retailers of fast moving consumer goods who are integrated with board or
its POS for real time reporting of sales and receipts
0.25%
(e) Person’s turnover from supplies through e-commerce including from running an
online market place as defined in clause (38B) of section 2.
(f) Person engaged in purchase and sale of used vehicles.
(g) Flour Mills

4. Clause (24D) of Part II of the Second Schedule substituted

The rate of minimum tax under sub-section (1) of section 113 in the case of distrib-
utors, dealers, sub-dealers, wholesalers of Pharmaceutical, fertilizer, Cigarette,
sugar, locally manufactured mobile phones, Fresh and frozen food in canned or
packaged form, electronics, Beverages and dairy products, Pasta, cereals, bis-
cuits, nuts, snacks and similar packaged food items, Condiments and baking 0.5%
items in bottled or packaged form, Skincare and cosmetics, haircare, oral care,
baby care, Cleaning agents like laundry detergents, dishwashing soaps and floor
cleaners, Toilet paper, paper towels, facial tissues, napkins, and similar prod-
ucts, Trash bags, aluminum foil, air freshener and insect sprays shall be 0.5%,
subject to the conditions that beneficiaries of reduced rate are appearing on the
active taxpayers’ lists issued under the provisions of the Sales Tax Act, 1990 and the
Income Tax Ordinance, 2001 (XLIX of 2001).”;

Pervious was as under:-

Reduce Rate under Clause (24D) Part II of the Second Schedule for distributors, 0.25%
dealers, sub-dealers, wholesalers and retailers of fast moving consumer goods, fertilizer,
locally manufactured mobile phones, sugar, electronics excluding imported mobile
phones, cement, steel and edible oil appearing in ATL. Tier 1 retailers who are inte-
grated with FBR online POS for sales tax.
5. Reduced Rate under Clause (28D) Part II of the Second Schedule for Traders having 0.5%
turnover upto 100million. For the purpose of this clause, ‘trader’ shall mean an indi-
vidual engaged in business of buying and selling of goods in the same state not include a
distributor.
6. Reduced Rate under Clause (28E) Part II of the Second Schedule for Traders of Yarn 0.5%

7. Companies operating Trading Houses as provided in Clause (57), Part IV, second 1%
schedule
8. In all other cases 1.25%

Clause (a) relating to distributors of pharmaceutical products, fast moving consumer goods (FMCGs),
and cigarettes has been made to be omitted through the Finance Act. And Clause (24D) of Part II of the
Second Schedule providing reduce rate of 0.25% has been substituted and rate has been enhanced to
0.5%.

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 Income Tax Rates-First Schedule
Few Important Notes:
• The provisions of minimum tax shall apply to a company and an individual having turnover of Rs.100
million or above or an association of persons having turnover of Rs.100 million or above in the tax
year 2017 or in any subsequent tax year.
• Provisions of section 113 are not applicable to the organizations listed in clause (11A), Part IV of
the Second Schedule. Few of them are:
o Provincial Governments and Local Governments, qualifying for exemption under section
49 and other Government bodies which are otherwise exempt from income tax.
o Public sector universities established solely for educational purposes and not for the
purposes of profit, with effect from tax year 2014.
o A resident company engaged in hotel business in Pakistan in respect of turnover for the
period starting on the first day of April, 2020 and ending on the thirtieth day of Septem-
ber, 2020.
o Persons mentioned in Table I of clause (66) of Part I of Second Schedule
o Mobile phone manufacturers engaged in the local manufacturing of mobile phone devices.

• Provisions of section 113 are not applicable to Small & Medium Enterprises (SMEs) as defined in
section 100E read with 14th Schedule to the ITO, 2001 as per Rule 7 of the Fourteenth Schedule.
• Provision of section 113 are not applicable to Builders & Developers, registered under Section
100D as provided in sub-section (2)(g) of section 100D.
• The provisions of Section 113 shall not apply to the entities and business types mentioned in
clause (11A) of Part IV of the Second Schedule to the ITO,2001.
• Minimum tax paid u/s 113 is allowed to be carried forward and adjusted against tax liability for
next two tax years
Tax on Dividend Income Part 1, Division III (Section 5)
The rate of tax imposed under section 5 on dividend received from a company shall be-
S. Rate for TY 2026
Person(s)
No. and Onward
a) In the case of dividends declared or distributed by the purchaser of a power 7.5%
project privatized by WAPDA or on shares of a company set up for power gen-
eration or on shares of a company, supplying coal exclusively to power genera-
tion projects;
(b) Real Estate Investment Trusts and cases other than those mentioned in (a), (ba), 15%
(c) and (d).
-in case of mutual funds 25%
-contingent upon proportional income derived from average annual invest-
(ba) ments in debt securities and equities 15%
-For corporate entity as recipient of dividend, the component derived from debt
securities 29%
In case of dividend received by a REIT scheme from Special Purpose Vehicle 0%
(c) In case of dividend received by others from Special Purpose Vehicle as defined 35%
under the Real Estate Investment Trust Regulations, 2015.
(d) In case of a person receiving dividend from a company where no tax is payable 25%
by such company, due to exemption of income or carry forward of business loss-
es under Part VIII of Chapter III or claim of tax credits under Part X of Chapter III.

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 Income Tax Rates-First Schedule

Advance Tax on dividend & Dividend in Specie Part III, Division I (Section 150)
Reference of 236S has been omitted consequent to merging of Section 236S with Section 150.
The rate of tax under section 150 shall be;
S. Rate for TY 2026
Person(s) and Onward
No.
a) In the case of dividends declared or distributed by the purchaser of a power 7.5%
project privatized by WAPDA or on shares of a company set up for power
generation or on shares of a company, supplying coal exclusively to power
generation projects;
(b) Real Estate Investment Trusts and cases other than those mentioned in (a), 15%
(ba), (c) and (d).
-in case of mutual funds 25%
-contingent upon proportional income derived from average annual invest- 15%
(ba) ments in debt securities and equities
-For corporate entity as recipient of dividend, the component derived from 29%
debt securities
In case of dividend received by a REIT scheme from Special Purpose Vehicle 0%
(c) In case of dividend received by others from Special Purpose Vehicle as de- 35%
fined under the Real Estate Investment Trust Regulations, 2015.
(d) In case of a person receiving dividend from a company where no tax is paya- 25%
ble by such company, due to exemption of income or carry forward of busi-
ness losses under Part VIII of Chapter III or claim of tax credits under Part X of
Chapter III.

Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO,2001.

Few Important Notes:

• Section 150 shall not apply in respect of intercorporate dividend within the group companies en-
titled to group taxation under section 59AA “subject to the condition that the return of the
group has been filed for the latest completed tax year. Clause (11B), Part IV, Second Schedule.

• Sections 150 shall not apply to any person making payment to National Investment Unit Trust or
a collective investment scheme or Approved Pension Fund or an Approved Income Payment
Plan or a REIT Scheme or a recognized provident fund or an approved superannuation fund or
an approved gratuity fund. Clause (47B), Part IV of the Second Schedule.

• Rule 7 of the Eleventh Schedule: The provisions of section 150 shall not apply to payment of divi-
dend exempt under sub-section (7) of section 100D for dividend paid by builders and developers
opting for taxation under section 100D.

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 Income Tax Rates-First Schedule

Certain payment by Life Insurance Companies Part III, Division IC Section 7G

and takaful Operators
A new Section 7G and rate under Division1C has been made to be inserted in respect of certain pay-
ments made by Life Insurance Companies and Takaful Operators.
S. No. Description Rate of Tax
1 Where payout or benefit is made within one year from the date of issuance of 15%
the life insurance policy, family takaful certificate or plan

2 Where payout or benefit is made after one year but before completion of four 10%
years from the date of issuance of the life insurance policy, family takaful certifi-
cate or plan.

Under newly inserted section 7G, For tax year, 2026 and onwards, a tax shall be imposed, at the rate
specified in Division IC of Part III of the First Schedule on every individual who receives any payout, ben-
efit, surrender value, maturity proceeds or similar payment (hereinafter referred to as payout) from a
life insurance business on account of insurance policy, family takaful certificate, plan or any similar ar-
rangement

Rate for Profit on Debt Part 1, Division IIIA (Section 7B)

Through the Finance Act 2025 the rate of tax for profit on debt imposed under section 7B shall be: -
Sr. Detail Amended Rate
#
(a) Yield or profit paid by a banking company or financial institution on an ac- 20%
count or deposit maintained with such company or institution;
(b) Yield or profit on Government Securities paid to any person other than an 20%
individual; and
(c) Yield or profit in cases other than those mentioned in clauses (a).and(b) 15%

Few Important Notes;

• Profit on debt is subject to withholding tax u/s 151 and rate for Non ATL will be increased by
100% as per provisions of the 10th Schedule to the ITO, 2001.
• Profit on Debt for other than companies shall be assessable under section 7B as separate block
of income if profit amount is upto Rupees five million. Means that withholding tax amount
would be equal to the amount of tax liability if profit on debt is upto Rs.5million.
• If the amount of profit on debt exceeds Rs.5 million it shall be taxed at normal applicable rates.
However, for companies the profit on debt shall be taxed at normal applicable rates irrespective
of the amount of profit on debt. The tax amount withheld by financial institutions shall be ad-
justable against the tax liability.

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 Income Tax Rates-First Schedule
Profit on Debt Part III, Division IA (Section 151)

Through the Finance Act 2025 the rate of tax to be collected under section 151 is as follows
Sr. Detail Amended Rate
#
(a) Yield or profit paid by a banking company or financial institution on an ac- 20% for ATL and
count or deposit maintained with such company or institution; and 40% for non ATL
(b) Yield or profit on Government Securities paid to any person other than an 20%
individual; and
(c) Yield or profit in cases other than those mentioned in clause (a) and(b). 15% for ATL and
30% for non ATL

Few Important Notes;

• The tax liability any amount paid as yield or profit on investment in Bahbood Savings Certificate
or Pensioner’s Benefit Account and Shuhada Family Welfare Account are exempt from withhold-
ing u/s 151 Ref Clause (36A), Part IV, Second Schedule. However such yield is subject to tax un-
der clause (c) of sub-section (1) of section 39 as per normal applicable rates to any person, sub-
ject to maximum of 5% of such yield or profit. Clause (6), Part III, Second Schedule.
• The tax deducted under this section is minimum tax except where a tax payer is a company.
• Tax Liability of persons other than a company or where profit does not exceeds Rs.5 million Ru-
pees shall be 15% as per rates u/s 7B to the ITO, 2001 as separate block of income. However
persons having income more than 5 million rupees, the tax liability would be computed as per
normal income tax rate applicable.

Gain on Disposal of Debt Securities Part III, Division IIIAA (Section151A)

In finance Act, the rate of tax has been amended from “15%” to “20%”, while the rest of the provision
shall remain unchanged.
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO, 2001

Rate of Tax on Payments for Digital Transactions

1st Schedule Part 1, Division IVA (Sec-
in E-Commerce Platforms tion 6A)
The rate of tax imposed under section 6A on payment for digitally ordered goods or digitally delivered
services through e-commerce platforms including websites shall be in case of payment through –

(i) Digital means or banking channels by payment intermediary 1% of the gross amount paid or
payable
(ii) Cash on Delivery by courier Services 2% of the gross amount paid or
payable

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 Income Tax Rates-First Schedule
On return on Investment in Sukuks from a Sukuk Part III, Division IB (Section 150A, Sec-
Holder tion 152(IDB)

Sr Description Rates TY-2022 on-

ward
(a) In case of Sukuk holder is a Company 25%
(b) In case sukuk holder is an individual or AOP and return is more thanRs.1m 12.5%
( c) In case sukuk holder is an individual or AOP and return is less thanRs.1m 10%
th
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 Schedule to
the ITO, 2001.

Capital gains on disposal of securities Part I, Division VII (Section 37-A)

Rate of tax on disposal of securities being substituted through Finance Act, 2024
S.# Holding Period Rate of Tax on disposal of securities acquired
Between 1st July 2022 From 1st July 2024
to 30th June 2024 (both
dates inclusive)
1 Holding Period does not ex- 15% for ATL persons on the Active
15%
ceed one year Taxpayers List on the date of acquisi-
2 Exceeds One year but does tion and the date of disposal of secu-
12.5%
not exceed Two Years rities
3 Exceeds Two years but does For Non-ATL Persons on the date of
10% acquisition and date of disposal of
s not exceed Three Years
4 Exceeds Three years but securities.-
7.5% Normal tax rates under Division I &
does not exceed Four Years
5 Exceeds Four years but does Division II of Part I of the First Sched-
5% ule shall apply
not exceed Five Years
6 Exceeds Five years but does
2.5% Provided that the rate of tax for indi-
not exceed Six Years
7 Exceeds Six Year 0% viduals and AOPs not appearing on
8 Future commodity contracts the Active Taxpayers List, shall not be
entered into by members of less than 15% in any case.
5%
Pakistan Mercantile Ex-
change

Provided that for securities except at S. No. 8 of the table,-

(i) The rate of 12.5% tax shall be charged on capital gain arising on disposal where the securities
are acquired on or after the first day of July, 2013 but on or before the 30th day of June, 2022.
(ii) The rate of 0% tax shall be charged on capital gain arising on disposal where the securities are
acquired before the first day of July, 2013
Provided further that the rate for companies in respect of debt securities shall be as specified in Division
II of Part I of the First Schedule
Provided further that a mutual fund or a collective investment scheme or a REIT scheme shall deduct
Capital Gains Tax at the rates as specified below, on redemption of securities as prescribed namely: —

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 Income Tax Rates-First Schedule
Category Rate
Individual and association of persons 15% for stock funds
15% for other funds
Company 15% 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,
the rate of tax deduction shall be 15%.
Provided further that no capital gains tax shall be deducted, if the holding period of the security ac-
quired on or before 30th day of June 2024 is more than six years
Explanation:- For removal of doubt, it is clarified that, the provisions of this proviso shall be applicable
only in case of a mutual fund or collective investment scheme or a REIT scheme.

Note: Above rates shall be same for ATL and non ATL persons as per amendment through FA2024 in
Rule10 of the 10th Schedule to the ITO,2001 and the rate shall be increased by 100% for non ATL on dis-
posal of securities acquired on and from 1st day of July 2025.

WHT on Rent of immovable Property Part III, Division V (Section 155)

The following are applicable rates under section 155 which were amended through the FA 2021.
(a) The rate of tax to be deducted under section 155, against (Payments to) individual/AOPs
[Link] Gross Amount TY-2021 onward
(1) 0- Rs. 300,000. Nil
(2) Rs. 300,001 to Rs. 600,000. 5% of the gross amount exceeding Rs.
300,000
(3) Rs. 600,001 to Rs. 2,000,000. Rs. 15,000 plus 10% of the gross
amount exceeding Rs. 600,000
(4) Exceeds Rs. 2,000,000 Rs. 155,000 plus 25% of the amount
exceeding Rs. 2,000,000
(b) The rate of tax to be deducted under section 155, 15% of the gross amount of rent
against (Payments to) Company
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO, 2001.
Few Important Notes
• Clarification was added through Finance Act 2021 where, it is clarified that withholding u/s 155
shall apply when a payment is made on account of rent of immoveable property irrespective of
head of income which would mean that in case rent received other than as an owner of land
and building e.g. sub-letting or otherwise, the withholding shall be made as per above rates.
• Income from property is taxable u/s 15, 15A and 16 as normal income and above withholding
tax would be adjustable. Certain allowances and deductions are also allowable under section
15A while computing the taxable income under the head income from property.

Page 12
 Income Tax Rates-First Schedule
Tax on Capital gains on disposal of Immovable Part I, Division VIII (Section 37(1A)
Property

The rate of tax to be paid under sub-section 1A of section 37 (Capital Gain on Immovable Property) has
been substituted through Finance Act, 2024 as follows:

S.# Holding Period Rate of Tax on properties Rate of Tax on

acquired on or before 30th properties
day of June, 2024 acquired on or
after 1st day of
July, 2024
Open Plot Constructed Flats 15% for ATL persons on
Property the date of disposal of
1. Holding period does not 15% 15% 15% Property
exceed one year
2. Exceeds one year but does 12.5% 10% 7.5% For Non ATL persons on
not exceed two years the date of acquisition
3. Exceeds two years but 10% 7.5% 0 and date of disposal of
does not exceed three Property
years Normal rate specified in
4. Exceeds three years but 7.5% 5% - Division I & Division II of
does not exceed four years Part -I of the First
5. Exceeds four years but 5% 0 - Schedule shall apply
does not exceed five years
6. Exceeds five years but 2.5% - - Provided that the rate of
does not exceed six years tax for Non ATL individ-
7. Exceeds six years 0% - - uals and AOPs on the
date of disposal shall
not be less than 15% in
any case.

Few Important Notes:

• Capital gain on disposal of immovable property is taxable in accordance with the provisions of
Section 37
• Amount of gain is the difference of consideration received minus cost of immovable property.
Where asset is acquired by way of gift, by succession, inheritance or devolution or distribution
of asset on liquidation of a company, the cost will be the same when the asset was acquired.
• Tax deducted under section 236C is adjustable against the final capital gain tax liability or other
tax liability at the time of filing of tax return.

Page 13
 Income Tax Rates-First Schedule
Advance Tax on Sale or Transfer of Immovable Property Part IV Division X (Section 236C)
The Finance Act replace the existing slab-based advance tax regime under Sections 236C (sale/transfer
of immovable property). The previous distinction between Active Taxpayers (ATL), late filers, and non-
filers has been rationalized, with revised rates introduced for filers and non-filers only.

Advance tax shall be collected on the gross amount of consideration at the following rates:
Tax
Category
Rate
Filer 2.75%
Non-Filer 11.5%

Previously rate was as under:-

S.# Amount Tax Rate (Per- Rate for Late Tax Rate
son appear in Filers (Person Not
Active Tax- Appearing appear in Ac-
payer List) ATL but filed tive Taxpayer
their tax re- List)
turn after due
date
1 Where the gross amount of the considera- 4.5 % 7.5% 11.5%
tion received does not exceed Rs. 50 million
2 Where the gross amount of the considera- 5% 8.5% 11.5%
tion received exceeds Rs. 50 million but does
not exceed Rs. 100 million
3 Where the Where the gross amount of the 5.5% 9.5% 11.5%
consideration received exceeds Rs. 100 mil-
lion

Advance Tax on purchase of immovable property Part IV, Division XVIII (Section 236K)
The Finance Act replace the existing slab-based advance tax regime under Sections 236K (purchase of
immovable property). The previous distinction between Active Taxpayers (ATL), late filers, and non-filers
has been rationalized, with revised rates introduced for filers and non-filers only.

Advance tax shall be collected on the gross amount of consideration at the following rates:

Tax
Category
Rate
Filer 1.25%
Non-Filer (Rs. 0 to Rs. 50 million) 10.5%
Non-Filer (Rs. 50 million to Rs. 100 million) 14.5%
Non-Filer (exceeding Rs. 100 million) 18.5%

Page 14
 Income Tax Rates-First Schedule

Pervious rates was under:-

S.# Amount Tax Rate Rate for Late Fil- Tax Rate
(Person ap- ers (Person Not
pear in Ac- Appearing ATL appear in
tive Taxpay- but filed their tax Active Tax-
er List) return after due payer List)
date
1 Where the Fair market value does not ex- 1.5 % 4.5% 10.5%
ceed Rs. 50 million
2 Where the Fair market value exceeds Rs. 50 2% 5.5% 14.5%
million but does not exceed Rs. 100 million
3 Where the Fair market value exceeds Rs. 100 2.5% 6.5% 18.5%
million

Advance tax on Imports Part II, Division II, (Section 148)

The twelfth schedule was inserted through Finance Act 2020 to categorize the imports of raw material,
capital goods and finished goods. The tax regimes of imports from persons specific rates to goods specific
rates has been specified in below table. These rates shall apply regardless of the status of the importer.
S. No. Persons Rate
1. Persons importing goods classified in 1% of the import value as increased by customs-duty,
Part I of the Twelfth Schedule sales tax and federal excise duty
2. Persons importing goods classified in 2% of the import value as increased by customs-duty,
Part II of the Twelfth Schedule sales tax and federal excise duty and 3.5% of the im-
port value as increased by customs duty, sales tax and
federal excise duty in case of commercial importer
3. Persons importing goods classified in 5.5% of the import value as increased by customs-
Part III of the Twelfth Schedule duty, sales tax and federal excise duty and 6% of the
import value as increased by customs duty sales tax
and federal excise duty in case of a commercial im-
porter.
a) Advance tax collection in case of manufacturer covered under S.R.O 1125(1)/2011 dated December
31, 2011 as it stood on the June 28th, 2019 on import of items covered under the aforementioned S.R.O
shall remain 1%; and
b) Advance tax collection on finished pharmaceuticals products that are not manufactured in Pakistan
and are certified by Drug Regulatory Authority of Pakistan shall remain 4%.
The following newly clause has been inserted through Finance Act 2021.
(c) In case of importers of CKD kits of electric vehicles for small cars or SUVs with 50kwh battery or be-
low and LCVs with 150 kwh battery or below shall be 1%
Provided further that the rate of tax on value of import of mobile phone by any person shall be as set
out in the table. Mobile handset levy was imposed through Finance Act 2018 and rates were revised through
the Finance Supplementary (Second Amendment) Act, 2019 (III of 2019) then the rates were though
Finance Act 2022 as follows;

Page 15
 Income Tax Rates-First Schedule

Tax (in Rs.)

Mobile Phones having C&F
[Link]. In CBU condition PCT Head- In CKD/SKD condition under
Value (US Dollars)
ing 8517.1219 PCT Heading 8517.1211
1 Up to 30 except smart phones 70 Nil
Above 30 and up to 100 &
2 100 Nil
smart phones upto 100
3 Above 100 and up to 200 930 Nil
4 Above 200 and up to 350 970 Nil
5 Exceeding 350 and up to 500 5,000 3,000
6 Exceeding 500 11,500 5,200
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO 2001.

Few Important Notes;

• In respect of old and used automotive vehicles, tax under section 148 shall not exceed the
amount specified in Notification No. S.R.O. 577(I)/2005, dated the 6 the June, 2005. Clause (4),
Part III, Second Schedule
• The provisions of section 148 shall not apply to persons on import of medicines for treatment of
life threatening rare diseases not manufactured in Pakistan, subject to the certain conditions.
Clause 12E, Part IV, Second Schedule.
• The provisions of section 148 shall not apply on the import of goods which takes place within
the jurisdiction of Border sustenance markets specified in Table 1 of clause (12N), Part IV, Sec-
ond Schedule.
• The provisions of section 148, regarding withholding tax on imports shall not apply in respect of
the goods mentioned as per clause (56) of Part IV of the Second Schedule. Few of them are
listed below:

o Goods classified under Pakistan Customs Tariff falling under “Chapter 86 and 99 except PCT
Heading 9918.
o Goods imported by direct and indirect exporters covered under sub chapter 7 of Chapter XII
of SRO 450(I)/2001 dated June 18, 2001
o Goods temporarily imported into Pakistan for subsequent exportation and which are ex-
empt from customs duty and sales tax under Notification 1 No.492 (I)/2009, dated the 13th
June, 2009.
o Goods temporarily imported into Pakistan by international athletes which would be subse-
quently taken back by them within one hundred and twenty days of temporary import.
o The Federal Government, a Provincial Government, a Local Government, a foreign company
and its associations whose majority share capital is held by a foreign government.
o A person who imports plant and machinery for execution of a contract with the Federal
Government or a provincial government or a local government and produces a certificate
from that government.

Page 16
 Income Tax Rates-First Schedule
o Goods produced or manufactured and exported from Pakistan which are subsequently im-
ported in Pakistan within one year of their exportation, provided conditions of section 22 of
the Customs Act, 1969 (IV of 1969) are complied with.
o Goods produced or manufactured and exported from Pakistan which are subsequently im-
ported in Pakistan within one year of their exportation, provided conditions of section 22 of
the Customs Act, 1969 (IV of 1969) are complied with.
o Motor vehicles upto 1000cc in CBU condition.
o Printed books excluding brochures, leaflets and similar printed matter, whether or not in
single sheets. (PCT code 49.01).
o Newspapers, journals and periodicals, whether or not illustrated or containing advertising
material (PCT code 49.02)
o Blind talking mobile phones imported by blind persons as per rules issued by the Board (re-
spective PCT headings)

• Section 148 shall not apply on mobile phones brought in personal baggage under Baggage Rules,
2006. Clause 60E, Part IV, Second Schedule.
• Section 148 shall not be applicable on import and subsequent supply of items with dedicated
use of renewable sources of energy like solar and wind etc., even if locally manufactured, which
include induction lamps, SMD, LEDs with or without ballast with fittings and fixtures, wind tur-
bines including alternator and mast, solar torches, tubular day lighting devices such assolatube,
lanterns and related instruments, PV modules with or without the related components including
invertors, charge controllers and batteries. Clause 77, Part IV, Second Schedule.
• The provisions of section 148 are not applicable on the following specified goods with specified
PCT code. Clause 91, Part IV, Second Schedule.
(i) Tillage and seed bed preparation equipment.
(ii) Seeding or planting equipment.
(iii) Irrigation, drainage and agro-chemical application equipment.
(iv) Harvesting, threshing and storage equipment.
(v) Post-harvest handling and processing & miscellaneous machinery
• The provisions of section 148 are not applicable to import of certain aircraft & related items to
aviation industry. Clause 92, Part IV, Second Schedule.

Advance tax on Construction and disposal of Part II, Division IIB, (Section 147,
Residential, Commercial and Other Buildings Sub-Section 5C)

A according to sub-section (5C) of section 147, the payment of advance tax is required to be paid by the
following persons as per the rates specified in Part IIB of the First Schedule in 04 equal instalments, on
project-to-project basis as may be prescribed, deriving income from the business of

(i) Construction and disposal of residential, commercial, or other buildings; or

(ii) Development and sale of residential, commercial or other plots for itself or otherwise

Other provisions of section 147 shall mutatis mutandis apply. The following table was inserted through
Finance Act, 2023

Page 17
 Income Tax Rates-First Schedule
Rate in respect of
(1) (2) (3) (4)
Area In Karachi, Hyderabad, Sukkur, Urban Areas
Lahore and Multan, Faisalabad, not specified in
Islamabad Rawalpindi, Gujranwa- columns (2) and
la, (3)
Sahiwal, Sialkot,
Bahawalpur, Peshawar,
Mardan, Abbottabad,
Quetta
TAX ON PERSONS FALLING UNDER SECTION 147(5C) (i) FOR COMMERCIAL BUILDINGS
Any size Rs.250 per Sq. ft. Rs. 230 per Sq. ft. Rs. 210 per Sq. ft.
TAX ON PERSONS FALLING UNDER SECTION 147(5C)(i) FOR RESIDENTIAL BUILDINGS
upto 3000 Sq. ft. Rs.80 per Sq. ft. Rs. 65 per Sq. ft. Rs. 50 per Sq. ft.
3000 Sq. ft. and Above Rs. 125 per Sq. ft. Rs. 110 per Sq. ft. Rs. 100 per Sq. ft.
TAX ON PERSONS FALLING UNDER SECTION 147(5C)(ii)
Any size Rs. 150 per Sq. yd Rs. 130 per Sq. yd Rs. 100 per Sq. yd
TAX ON PERSONS FALLING UNDER SECTION 147(5C)(ii) FOR DEVELOPMENT OF INDUSTRIAL AREA
Any size Rs. 20 per Sq. yd Rs. 20 per Sq. yd Rs. 10 per Sq. yd:

Provided that in case of mixed-use buildings having both commercial and residential areas, respective
rates mentioned above shall apply:
Provided further that in case of development of plots and constructing buildings on the same plots as
one project, both rates shall apply.”

Withholding Tax Rates on Certain Payments to Part 1, Division IV

Non-Residents under Section 152 Part III, Division II , IB
.

Ref Withholding Nature of Payment Rate

Agent
152(1) Every Person Payments to a non-resident person for Royalty or 15% (Division IV of Part I
Making Payment Fee for Technical Services or fee of offshore dig- of the First Schedule)
ital Services
152(1) Every Person In any other case 10% (Division IV of Part I
Making Payment of the First Schedule)
152(1A) Every Person a) Payments to a non-resident against a 7% (Division II of Part III
Making Payment contract or sub contract under a construction as- of the First Schedule)
sembly or installation project including a contract
for supply of supervisory activities in relation to
such project.
b) Payments to a non-resident against any
other contract or construction or services relating
thereto
c) Payments to a non-resident against a
contract for advertisement services rendered by
TV satellite Channels

Page 18
 Income Tax Rates-First Schedule
152(1AA) Every Person Payment against Insurance or Reinsurance Premi- 5% (Division II of Part III
Making Payment um of the First Schedule)

152(1AAA) Every Person Against advertisement services by non resident 10% (Division II of Part III
Making Payment media persons of the First Schedule)

152(1BA) Every Person Payment to non resident against foreign produced 20% on gross amount
Making Payment commercials for advertisement on any television
channel or any other media directly or indirectly

152(1C) Every Banking Payment against fee for offshore digital services 5%(Division IV of Part I of
Company or a chargeable to tax under section 6 to a non resi- the First Schedule)
Financial Institu- dent person on behalf of any resident or PE or non
tion resident

152(1D) Every Banking On capital gain arising on disposal of debt instru- 10%(Division II of Part III
Company or a ments or govt securities including treasury bills of the First Schedule)
Financial Institu- and Pakistan Investment bonds invested through
tion Special convertible rupee account (SCRA) of non
resident company having no PE in Pakistan

152(1DA) Every Banking On Capital gain arising on the disposal of debt 10%(Division II of Part III
Company instrument and govt securities and certificates of the First Schedule)
including sharia compliant variant invested
through Foreign Currency Value Account (FCVA)
or Non Resident Pakistani Rupee Value Account
(NRVA) of a non resident individual holding POC
or NOC or CNIC

152(1DB) Every Special On return on investment on sukuks to a non resi- 25% in case sukuk holder
Purpose Vehicle dent sukuk holder is a company
or a Company 12.5% in case of individu-
al or AOP if Return on
investment is more than
Rs.1 million and 10% in
case of individual or AOP
if return is less than Rs.1
million (Division IB of Part
III of the First Schedule)
152(2) Every Person On the payments other than which are covered 20%(Division II of Part III
making Payment under subsection (1) or Subsection (1A, (1AA), of the First Schedule)
(1AAA), (1C) or (2A) which are not

The provisions of section 152 shall not apply in case of a Hajj Group Operator in respect of Hajj opera-
tions. Clause (72AA), Part IV, Second Schedule.

Page 19
 Income Tax Rates-First Schedule
Withholding Tax Rates on Certain Payments to Part III Division II (Section 152(2)
PE of Non-Residents

Nature of Payment Rates for TY-2026 and onward

Payments to a Permanent The rate of tax to be
establishment of a nonresi- deducted from a pay- 5% for the company
dent person for payments ment under clause (a) 5.5% in another case
against sales of goods of Section 152 (2A)
Payments to a Permanent The rate of tax to be 8% of the gross amount payable on *specified
establishment of a nonresi- deducted from a pay- service mentioned below this table.
dent person for payments ment under clause (b) Provided that the rate of tax shall be 4% in case
against services section 152(2A) of IT services and IT enabled services as defined
in section 2
For Services other than “specified.
The rate will be 15% of the gross amount pay-
able
Payments to a Permanent The rate of tax to be 15% in case of sportsperson
establishment of a nonresi- deducted from a pay-
dent person for payments ment referred to in 8% in other cases
against contracts clause (c) section 152
(2A)
*Specified services: Services on which reduced rate applicable are; transport services, freight forward-
ing services, air cargo services, courier services, manpower outsourcing services, hotel services, secu-
rity guard services, software development services, IT services and IT enabled services as defined in
section 2 clause (133) of Part I of the Second Schedule, tracking services, advertising services (other
than by print or electronic media), share registrar services, engineering services, car rental
services, building maintenance services, services rendered by Pakistan Stock Exchange Limited and
Pakistan Mercantile Exchange Limited inspection and certification, testing and training services, oil-
field Services”;
Note: Above rates shall be increased by100% for payments under subsections (1), (1A) (1AA,), (1AAA) &
(2), not appearing in ATL as per 10th Schedule to the ITO,2001.

Further, in case of tax treaties between Pakistan & other countries, the withholding rates would be ap-
plicable according to the said treaty with any specific country.
Payments for Goods & Services Part III Division III (Section 153)
Nature of Previous New Rates
Nature of Income
Payment Rates
In case of sale of rice, cottonseed oil or edible oil 1.5% 1.5%
Supplies (Section

Toll manufacturing 9% 9%
In case of sale of goods on the
amount payable to companies. Other than toll manu- 5% 5%
153(1)(a)

facturing
In case of sale of goods on pay- 11% 11%
Toll manufacturing
ments to other taxpayers i.e

Page 20
 Income Tax Rates-First Schedule
other than companies Other than toll manu- 5.5% 5.5%
facturing

4% on IT and 4% on IT and IT
IT enabled enabled Ser-
Services vices
i- On specified services as mentioned below the table;
6% for all oth- 7% for Specified
er services Services

ii- Independent professional services such as doctors, law- 15%

Services (Section 153(1)(b)

yers, architects, accountants software engineers or devel-

opers, working independently
iii- In Case of persons making payments to electronic and
print media for advertising services (in case payment to a 1.5% 1.5%
Company)
iv- In case of Companies rendering or providing terminal - 12%
and port operating services.
In case of other services on the amount payable to per- 15% 14%
sons other than (i), (ii), (iii) and (iv).
In case of contracts on payments to companies 7.5% 7.5%
Contracts

153(1) (c)

In case of contracts on payments to other taxpayers i.e 8% 8%

(Section

other than companies

In case of contracts on payments to sportspersons 10% 10%
i Digital means or banking channels by payment interme-
dered goods
Digitally or-

or services

commerce
through e-

platforms

diary (on the gross amount paid or payable) 1% 1%

(Section
153(2A)

ii Cash on Delivery by courier Services (on the gross

amount paid or payable) 2% 2%

Specified services: Services on which reduced rate applicable are; 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 in Section 2
of the ITO, 2001 tracking services, advertising services (other than by print or electronic media), share
registrar services, engineering service including architectural services, warehousing services, services
rendered by Non Finance Banking Companies as defined in clause (35B) of section 2 of this Ordinance,
data services provided under license issued by the Pakistan Telecommunication Authority, telecommuni-
cation infrastructure (tower) services, car rental services, building maintenance services, services ren-
dered by Pakistan Stock Exchange Limited and Pakistan Mercantile Exchange Limited, inspection, certifi-
cation, testing and training services, oil field services, telecommunication services, collateral manage-
ment services, travel and tour services, REIT management services, services rendered by National Clear-
ing Company of Pakistan Limited.

Page 21
 Income Tax Rates-First Schedule
Few Important Notes:
• Subsection (1) 153 provides that
o Deduction on supply of goods shall not apply where payment is less than Rs.75,000 in
aggregate, during a financial year to a single vendor.
o Deduction against provision of services shall not apply where payment is less than
Rs.30,000/- in aggregate, during a financial year to a single vendor.
• Subsection (5) provides that tax u/s 153 shall not apply to-
(a) a sale of goods where the sale is made by the importer of the goods and tax under sec-
tion 148 in respect of such goods has been paid and the goods are sold in the same con-
dition as they were when imported;
(b) a refund of any security deposit;
(c) a payment made by the Federal Government, a Provincial Government or a Local Gov-
ernment to a contractor for construction materials supplied to the contractor by the
said Government or the authority;
(d) the purchase of an asset under a lease and buy back agreement by a modaraba, leasing
company, banking company or financial institution; or
(e) any payment for securitization of receivables or issuance of sukuks by a Special Purpose
Vehicle to the Originator
• Clause (24A), Part II, Second Schedule: The rate of tax, under clause (a) of sub-section (1) of sec-
tion 153, from distributors of cigarette shall be 2.5% and pharmaceutical products shall be 1% of
the gross amount of payments.
• Clause (24C), Part II, Second Schedule: The rate of tax under clause (a) of sub-section (1) of sec-
tion 153 in the case of distributors, dealers, sub-dealers, wholesalers of Pharmaceutical, ferti-
lizer, Cigarette, sugar, locally manufactured mobile phones, Fresh and frozen food in canned
or packaged form, electronics, Beverages and dairy products, Pasta, cereals, biscuits, nuts,
snacks and similar packaged food items, Condiments and baking items in bottled or pack-
aged form, Skincare and cosmetics, haircare, oral care, baby care, Cleaning agents like laun-
dry detergents, dishwashing soaps and floor cleaners, Toilet paper, paper towels, facial tis-
sues, napkins, and similar products, Trash bags, aluminum foil, air freshener and insect
sprays shall be 0.5%, subject to the conditions that beneficiaries of reduced rate are appearing
on the active taxpayers’ lists issued under the provisions of the Sales Tax Act, 1990 and the In-
come Tax Ordinance, 2001 (XLIX of 2001). Provided that the benefit under this clause shall only
be available to those Tier-1 retailers as defined under Sales Tax Act, 1990 who are integrated
and configured with Board or its computerized system for real time reporting of sales or receipts.
• Clause (28F), Part II, Second Schedule: The rate of tax under clause (b) of sub-section (1) of sec-
tion 153 in case of oil tanker contractor services shall be 2% of the gross amount of the pay-
ments.
• Clause (31) Part II, Second Schedule The rate of tax under clause (a) of sub-section (1) of section
153 shall be 1% on payment for sale of gold and silver and articles thereof and the tax so de-
ducted shall be adjustable;
Few Exceptions from Withholding under Part IV of the Second Schedule through the following
clauses.
• (11E) The provisions of clause (b) of sub-section (1) of section 153 shall not apply to payments
received by Sui Southern Gas Company Limited and Pakistan LNG Terminal Limited from Sui
Northern Gas Pipelines Limited on account of re-gasification charges.

Page 22
 Income Tax Rates-First Schedule
• (12) a) The provisions of clause (l) of section 21 and clause (a) of sub-section (1) of section
153 shall not apply where agricultural produce is purchased directly from the grower of such
produce subject to provision of a certificate by the grower to the withholding agent in the pre-
scribed format,
(b) the provisions of clause (a) of sub-section (1) of section 153 shall not apply only in case of
cash payments made for meeting the incidental expenses of a business trip to the crew of oil
tanker. This exemption shall not apply in case of any other payments made by owners of oil
tankers.
• (43A) The provisions of sub-section (1) of section 153 shall not apply to payments received by a
person on account of supply of petroleum product imported by the same person under the
Government of Pakistan’s deregulation policy of POL products;
• (43B) The provisions of clause (a) sub-section (1) of section 153 shall not apply to payments re-
ceived on sale of air tickets by travelling agents, who have paid withholding tax on their com-
mission income
• (43C) The provision of clause (a) of sub-section (1) of section 153 shall not be applicable to any
payment received by a petroleum agent or distributor who is registered under Sales Tax Act,
1990 on account of supply of petroleum products
• (43D) The provisions of clauses (a) and (b) of sub-section (1) of section 153 shall not apply in
case of an oil tanker contractor with effect from 1st July 2008, provided that such contractor
pays tax @ 2.5%, on the payments for rendering or providing of carriage services.
• (43E) The provisions of clauses (a) and (b) of sub section (1) of section 153 shall not apply in case
of goods transport contractors, provided that such contractors pay tax at the rate of 3.5% on
payments for rendering or providing of carriage services.
• (43F) The provisions of section 153 shall not apply in the case of a start-up, being recipient of
payment, as defined in clause (62A) of section 2.
• (43G) The provisions of section 153 shall not apply to commodity futures contracts listed on a
Futures Exchange licensed under the Futures Market Act, 2016 (XIV of 2016)
• (43H) The provisions of clause (b) of sub-section (1) of section 153 shall not apply to an exhibitor
or a distributor of a feature film, as a payer, on payment made to a distributor, producer or im-
porter of a feature film.
(45) The provisions of sub-section (1) of section 153 shall not apply to any manufacturer-cum-
exporter as the prescribed person , Provided that—
(a) the manufacturer-cum-exporter shall deduct tax from payments made in respect of goods
sold in Pakistan;
(b) if tax has not been deducted from payments on account of supply of goods in respect of
goods sold in Pakistan, the tax shall be paid by the manufacture-cum-exporter, if the sales in Pa-
kistan are in excess of five per cent of export sales.
• (45A) The rate of deduction of withholding tax under clauses (a) and (b) of sub-section (1) of
section 153 shall be one per cent on local sales, supplies and services provided or rendered to
the taxpayers falling in the following categories namely:-
(i) textile and articles thereof;
(ii) carpets;
(iii) leather and articles thereof including artificial leather footwear;
(iv) surgical goods; and
(v) sports goods;

Page 23
 Income Tax Rates-First Schedule
Explanation.—For removal of doubt, it is clarified that the relief of reduced rate for withholding
tax under clause (a) and (b) of subsection (1) of section 153 is available only to the local sales,
supplies and services made by the taxpayers of categories specified at serial no (i) to (v) of this
clause:
Provided that the rate of deduction of withholding tax under clauses (a) and (b) of sub-section
(1) of section 153 shall be 0.5% on local sales, supplies and services made by traders of yarn to
the above mentioned categories of taxpayers.

• (45B) The provisions of section 153 shall not apply on the purchase of used motor vehicles from
general public.
• (46) The provisions of sub-section (1) of section 153 shall not apply to any payment received by
an oil distribution company or an oil refinery and provisions of sub-section (2A) of section152
shall not apply to Permanent Establishment of Non-resident Petroleum Exploration and Produc-
tion (E&P) Companies for supply of its petroleum products.
• (46A) the provisions of sub-section (3)of section 153 shall not apply to any payment received by
a manufacturer of iron and steel products relating to sale of goods manufactured by him.
• (46AA) exception from provisions of section 153 has been provided under his clause for
(i)Federal Government, (ii)Provincial Government, (iii)Residents of AJK execute contracts in AJK
and produce certificate from concerned Income Tax Authority.
(vi) Subject to clause (12) persons receiving payments exclusively for agricultural produce includ-
ing;

(I)Fresh milk
(ii)Fish by any person engaged in fish farming
(III) live chicken, birds and eggs by any person engaged in poultry farming;
(IV) live animals by any person engaged in cattle farming;
(V) unpackaged meat; and
(VI) raw hides:
Provided that this clause shall not apply to the payments for agriculture produce which
has been subjected to any process other than that which is ordinarily performed to ren-
der such produce to be fit to be taken to the market.”; and

(v) companies receiving payments for the supply of electricity and gas including companies re-
ceiving payments for the transmission of electricity and gas.
(vi) companies receiving payments for the supply of crude oil;
(vii) hotels and restaurants receiving payments in cash for providing accommodation or food or
both, as the case may be;
(viii) shipping companies and air carriers receiving payments for the supply of passenger tickets
and for the cargo charges of goods transported;
(ix) individuals who are not registered under section 181 of the Ordinance, receiving payments
for the supply of sand, bricks, grit, gravel, crushed stone, soft mud or clay; and
(x) artisans, plumbers, electricians, surface finishers, carpenters, painters or daily wagers, receiv-
ing payments in respect of services provided or rendered to the construction sector including
construction of buildings, roads, bridges and other such structures or the development of land,
subject to the following conditions, namely;

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 Income Tax Rates-First Schedule

(a) services under this clause are provided or rendered by an individual who is not regis-
tered under section 181;
(b) the name, Computerized National Identity Card Number and address of such individ-
ual is recorded by the recipient of such service; and
(c) payment for such services is made directly to such individual

• (47A) The provisions of section 153 shall not apply in respect of payments received by a resident
person for supply of such goods as were imported by the same person and on which tax has
been paid under section 148.
• (47D) The provisions of clause (a) of sub-section (3) of section 153 shall not apply to cotton gin-
ners.
• (57) The provisions of section 153 shall not apply to companies operating Trading Houses
which—

(i) have paid up capital of exceeding Rs.250 million

(ii) own fixed assets exceeding Rs.300 million at the close of the Tax Year;
(iii) maintain computerized records of imports and sales of goods;
(iv) maintain a system for issuance of 100% cash receipts on sales;
(v) present accounts for tax audit every year; and
(vi) is registered 1under the Sales Tax Act, 1990
Provided that the exemption under this clause shall not be available if any of the afore-
mentioned conditions are not fulfilled for a tax year
Provided further that minimum tax under section 113 shall be 0.5% upto the tax year
2021 and one per cent thereafter.

Explanation.
(i) For the removal of doubt, exemption under this clause, in respect of section 153, shall
only be available as a recipient and not as withholding agent.
(ii) It is further clarified that in-house preparation and processing of food and allied
items for sale to customers shall not disqualify a company from being treated as a Trad-
ing House, provided that all the conditions in this clause are fulfilled and sale of such
items does not exceed two per cent of the total sales.

• (77) Provisions of sections 148 and 153 shall not be applicable on import and subsequent supply
of items with dedicated use of renewable sources of energy like solar and wind etc., even if lo-
cally manufactured, which include induction lamps, SMD, LEDs with or without ballast with fit-
tings and fixtures, wind turbines including alternator and mast, solar torches, tubular day light-
ing devices such as solar tube, lanterns and related instruments, PV modules with or without the
related components including invertors, charge controllers and batteries.

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 Income Tax Rates-First Schedule
Exports Part III, Division IV (Section 154) and
Section 153(2)
The rate of tax to be deducted under section 154 shall be as follows:
[Link] Types of Receipts Rate of Tax Rate
1 The rate of tax to be deducted from exporter 1% of the pro- 1.25% of the pro-
under sub-sections (1), (3), (3A), (3B) or ceeds of the ex- ceeds of the ex-
(3C) of section 154 shall be port port
3. The rate of tax to be deducted under sub- 1% of proceeds 1.25% of proceeds
section (2) of section 153 i.e. for rendering
of or providing services of stitching, dying,
printing, embroidery, washing, sizing and
weaving, shall at the time of making the
payment- to be ducted by an exporter or an
export house

Note:
• The tax deducted under this section has been shifted from FTR to minimum tax regime through
FA 2024.
• The requirement to pay advance tax under Section 147 at the rate of 1% on export proceeds,
which was treated as minimum tax, has been abolished through the Finance Act, 2026.

Exports of Services Part III, Division IVA (Section 154A)

The rate of tax to be deducted under section 154A substituted as under through Finance Act 2022:

[Link] Types of Receipts Pervious Rate Current Rate

1 Export proceeds of Computer software or IT 0.25% of proceeds 0.25% of proceeds
services or IT enabled services by persons for TY 2024 up to for TY 2024 up to
registered with Pakistan Software Export Tax Year 2026 Tax Year 2029
Board
2 Any other case 1% of proceeds 1% of proceeds

The tax deducted under section 154A is final tax for the exporters of services subject to certain condi-
tions:
• Tax Return has been filed
• Withholding tax compliance made and statements has been filed (if required)
• Sales Tax return (if required) has been filed. But this condition is not applicable for exporter of
IT & IT enabled services who are registered with PSEB.

Revenue from Social Media Platforms Part III, Division IIIAB (Section 154B)
Through FA 2026 the proposed amendment replaces the withholding tax provisions with a single, simpli-
fied tax rate of 5% under section 154B.

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 Income Tax Rates-First Schedule
Withholding tax on Prizes and Winnings Part III, Division VI (Section 156)
Nature of Payment Rate
• On a prize on prize bond or crossword puzzle 15%
• On winnings from a raffle, lottery, prize on winning a quiz, prizes offered by a 20%
company for promotion of the sale
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO,2001.
Withholding Tax on Petroleum Products Part III, Division VIA (Section 156A)
The rate of collection of tax u/s 156A shall be 12% of the amount of payment.
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO,2001.
Brokerage & Commission Part IV Division II First Schedule (Section 233)
S. # Person(s) Rates
1 Advertising Agents 10%
2 Life Insurance Agents where commission received is less than Rs.0.5million per 8%
annum
3 Persons not covered in 1 and 2 above 12%
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO,2001..

Advance Tax on new registration or purchase of Part IV Division VII (Section 231B
Motor Vehicles
Tax rates for new registration of vehicles –Section 231B (1) or sales by manufacturers-Section 231B (3)
[Link]. Engine Capacity Tax Rates
1 Up to 850cc 0.5 % of the Value
2 851 cc to 1000cc 1 % of the Value
3 1001cc to 1300cc 1.5 % of the Value
4 1301cc to 1600cc 2 % of the Value
5 1601cc to 1800cc 3 % of the Value
6 1801cc to 2000cc 5 % of the Value
7 2001cc to 2500cc 7 % of the Value
8 2501cc to 3000cc 9 % of the Value
9 Above 3000cc 12 % of the Value
Provided that the value for the purpose of S. Nos. 7 to 9 of the above Table shall be in case of motor
vehicle –
(i) imported in Pakistan, the import value assessed by the Customs authorities as increased by customs
duty, federal excise duty and sales tax payable at import stage
(ii) manufactured or assembled locally in Pakistan, the invoice value inclusive of all duties and taxes; or
(iii) auctioned, the auction value inclusive of all duties and taxes.
In case where engine capacity is not applicable and the value of vehicle is rupees five million or more,
the rate of tax collectible shall be 3% of the import value as increased by customs duty, sales tax and

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 Income Tax Rates-First Schedule
federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or as-
sembled vehicles.”
Note: Tax required to be collected under section 231B shall be increased by two hundred percent for the
persons not appearing in ATL as per 10th Schedule to the ITO 2001.
Advance Tax on transfer of Motor Vehicles Part IV Division VII (Section 231B (2)
No Change
Tax rates for transfer of registration or ownership of motor vehicles –Section 231B (2) - applicable if
transfer of vehicle is executed within five years from the date of first registration in Pakistan

[Link]. Engine Capacity Rates

1 Upto 850cc -
2 851cc to 1000cc Rs. 5,000
3 1001cc to 1300cc Rs. 7,500
4 1301cc to 1600cc Rs. 12,500
5 1601cc to 1800cc Rs. 18,750
6 1801cc to 2000cc Rs. 25,000
7 2001cc to 2500cc Rs. 37,500
8 2501cc to 3000cc Rs. 50,000
9 Above 3000cc Rs. 62,500
Provided that in cases where engine capacity is not applicable and the value of vehicle is rupees five mil-
lion or more, the rate of tax collectible shall be Rupees twenty thousand:
Provided further that the rate of tax to be collected under this clause shall be reduced by ten percent
each year from the date of first registration in Pakistan.
Advance Tax on transfer of Motor Vehicles Part IV Division VII (Section 231B (2A)
Current Rates for collection of advance tax under sub-section 2A of section 231B has been amended if
the locally manufactured motor vehicle has been sold prior to registration by the person who originally
purchased it from the local manufacturer
[Link]. Engine Capacity Tax
1 Up to 1000cc Rs. 100,000/-
2 1000 cc to 2000cc Rs. 200,000/-
3 2001cc and above Rs. 400,000/-

Advance Tax on Motor Vehicles – collected with Token Tax Part IV, Division III (Section 234
(i.)Rate of collection of tax on Goods Transport Vehicles
Detail Rates
In the case of goods transport vehicle for laden weight 2.5/KG
(ii) In the case of passenger transport vehicles plying for hire with a Rates (Rs. Per Seat Per annum)
registered seating capacity of--- Non Air Air Conditioned
Conditioned
(a) Four (4) or more persons but less than ten (10) persons. 500 1000
(b) Ten (10) or more persons but less than twenty (20) persons. 1500 2000
(c) Twenty (20) persons or more 2500 4000

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 Income Tax Rates-First Schedule
(iii) Advance Tax on Private Motor Vehicle to be collected with Token Tax (if in Installment)-upto10
years

S. No. Engine Capacity Rate

1 upto 1000cc Rs. 800
2 1001cc to 1199cc Rs. 1,500
3 1200cc to 1299cc Rs.1,750
4 1300cc to 1499cc Rs.2,500
5 1500cc to 1599cc Rs.3,750
6 1600cc to 1999cc Rs.4,500
7 2000cc & above Rs.10,000
(iv) Advance Tax on Private Motor Vehicle to be collected with Token Tax (if paid lumpsum)
S. No. Engine Capacity Rate
1 upto 1000cc Rs. 10,000
2 1001cc to 1199cc Rs. 18,000
3 1200cc to 1299cc Rs. 20,000
4 1300cc to 1499cc Rs. 30,000
5 1500cc to 1599cc Rs. 45,000
6 1600cc to 1999cc Rs. 60,000
7 2000cc & above Rs. 120,000

Advance Tax on Electricity Consumption Part IV, Division IV (Section 235)

1. The rate of collection of tax from industrial, commercial consumers as per following table:
S. No. Gross Amount of Bill Tax
1 Upto Rs:500 Rs: 0
2 Exceeds Rs: 500 but does not 10% of the amount
exceeds Rs: 20,000
3 Exceeds Rs: 20,000 Rs: 1,950/- + 12% of the amount exceeding Rs: 20,000/- for
commercial consumer and Rs: 1,950/- + 5% of the amount
exceeding Rs: 20,000/- for industrial consumers.
2. The rate for domestic consumers shall be charged as if their name does not appears in ATL
S. No. For Non ATL Domestic Consumers Rate
1 if the amount of monthly bill is Rs.25,000 or more 7.5%
2 if monthly bill is less than Rs.25,000. 0%
Advance tax from Telephone Users Part IV Division V (Section 236)

Subscribers Amended Rates

(a) in the case of a telephone subscriber (other than mo- No Change
bile phone subscriber) where the amount of monthly
bill exceeds Rs.1000.
(b) in the case of the subscriber of internet, mobile 15% of the amount of bill or sales price
telephone and pre-paid internet or a telephone card of internet pre-paid card or prepaid tel-
ephone card or sale of units through any

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 Income Tax Rates-First Schedule
electronic medium or whatever form.
Provided that in the case of persons
mentioned in income tax general order
issued under section 114B, the rate of
collection of tax shall be 75% of the
amount of bill or sale price of internet
pre-paid card or prepaid telephone card
or sale of units to any electronic medi-
um or whatever form.

Advance tax at the time of sale by auction Part IV Division VIII (Section 236A)
10% of the gross sale price of any property or goods sold by auction and sale by auction of train man-
agement services by Pakistan Railways from tax year 2020 & onward.
Provided that in case of immovable property sold by auction, the rate of collection of tax under this sec-
tion shall be 5% of the gross sale price
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO,2001..
Advance Tax on TV plays and advertisement Part IV Division XA (Section 236CA)

[Link]. Description Rate

1. Foreign-produced TV drama serial or play Rs. 1,000,000 per episode
2. Foreign-produced TV play (single episode) Rs. 3,000,000
3. Advertisement starring foreign actor Rs. 100,000 per second.

Advance Tax on Functions and Gatherings Part IV Division XI (Section 236CB)

Rate of tax to be collected u/s 236CB hall be @10% on functions and gatherings. The rate for Non ATL
will be 20%

Advance tax on sale to Distributors, Dealers or Part IV, Division XIV (Section 236G)
Wholesalers
Category of Salle Rates Rate for Non ATL
Fertilizers 0.25% for Active Tax Payers for income tax and 0.7%
sales tax
Others 0.1% 2%
As per amendment in Section 236G the above tax would be applicable across the board on sale by every
importer and manufacturer.
Previously it was applicable on the specified sectors as below;
“Pharmaceuticals, poultry and animal feed, edible oil and ghee, auto parts, tyres, varnishes, chemicals,
cosmetics, IT equipment, electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pes-
ticides, cigarettes, glass, textile, beverages, paint or foam sector
Above rates shall be increased from (0.2%) double to 2% for other than fertilizer for the persons not ap-
pearing in ATL as per 10th Schedule to the ITO,2001.

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 Income Tax Rates-First Schedule
Advance tax on sale to Retailes Part IV, Division XIV (Section 236H)

As per amendment in section 236H this would be applicable irrespective of any sector as previously it
was applicable to the specified sectors like Electronics, sugar, cement, iron and steel products, motor-
cycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, pharmaceuticals, poultry
and animal feed, edible oil and ghee, auto parts, tyres, varnishes, chemicals, cosmetics, IT equip-
ment

Rate for ATL is 0.5%

For Non ATL it would be 2.5%

Advance Tax on Cash withdrawal Section 231AB

The rate of collection of tax u/s 231AB will be @ 0.8 % of Aggregate amount of cash withdrawal from a
bank account exceeding Rs. 50,000 in a day for the person whose name does not appear in the active
taxpayer's list.

Advance Tax on Foreign domestic workers Section 231C

The amount of collection of Tax Rs. 200,000/- shall be levied at the time when any authority is issuing or
renewing domestic aide visa to any foreign national as a domestic worker from the agency, sponsor or
the employer of the foreign domestic worker.
Note: This tax shall be adjustable against the income of the agency, sponsor or the employer of the for-
eign domestic worker.

Advance Tax on Amount Remitted abroad Part IV, Division XXVII (Section 236Y)
through credit, debit or prepaid cards

The withholding tax rate on amounts remitted abroad through credit cards, debit cards, and prepaid
cards has been reduced from 5% to 0.5%
Note: Above rates shall be increased by100% for the persons not appearing in ATL as per 10 th Schedule to
the ITO, 2001

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