Income Tax Rates

The tax rates for salaried individuals are progressive, meaning the percentage increases as your income rises through various levels. For the current year, the first 600,000 PKR of annual income remains exempt from tax. Beyond this threshold, different rates apply ranging from 5% to 35% for the highest earners. Our lawyers provide detailed charts that break down these percentages for each income bracket, helping you calculate your exact monthly liability. We also guide you on how to apply for tax credits that can effectively lower the applicable rate on your total taxable income, ensuring you are not overpaying due to a misunderstanding of the slab transitions.

Non-salaried individuals and Associations of Persons (AOPs) generally face a different tax structure compared to those on a fixed salary. The exemption limit is often lower, and the tax percentages tend to be higher at earlier income stages. This is because non-salaried taxpayers can deduct business expenses before arriving at their taxable income. NMK Legal helps business owners in Peshawar and Islamabad navigate these specific slabs to ensure accurate quarterly tax payments. We provide legal opinions on whether a business should be registered as an AOP or a company to benefit from more favorable tax rates based on their projected annual turnover and profit margins.

In Pakistan, the corporate tax rate is generally fixed but varies based on the classification of the company. Small companies, as defined by the Income Tax Ordinance, often enjoy a lower preferential rate to encourage entrepreneurship. In contrast, banking companies and large public limited companies are subject to higher standard rates and may also be liable for additional surcharges like the Super Tax on high-earning entities. Our legal experts assist in classifying your entity correctly to ensure you are taxed at the lowest eligible corporate rate. We also manage the documentation required to prove your status as a small company to the tax authorities.

The Super Tax is an additional levy imposed on individuals and companies whose income exceeds certain high-income thresholds, typically starting at 150 million PKR. This tax is calculated in addition to the standard income tax rates, significantly increasing the effective tax rate for the wealthiest taxpayers. Navigating the calculation of Super Tax requires careful accounting of your total income from all sources. NMK Legal provides specialized litigation and advisory services for high-net-worth individuals to ensure that the Super Tax is calculated only on the legally defined income base, preventing the misapplication of this levy on exempt or non-taxable gains.