Tax on Salaried Person in Pakistan
In Pakistan, salaried individuals are required to pay income tax on their earnings. The tax system in Pakistan is governed by the Federal Board of Revenue (FBR). In this blog, we will provide a comprehensive guide to tax on salaried persons in Pakistan.
Income Tax Rates
The income tax rates for salaried individuals in Pakistan are as follows:
• For individuals earning up to PKR 1.2 million per annum, the tax rate is 0%.
• For individuals earning between PKR 1.2 million and PKR 2.4 million per annum, the tax rate is 5%.
• For individuals earning between PKR 2.4 million and PKR 4.8 million per annum, the tax rate is 10%.
• For individuals earning between PKR 4.8 million and PKR 7.2 million per annum, the tax rate is 15%.
• For individuals earning between PKR 7.2 million and PKR 10.8 million per annum, the tax rate is 20%.
• For individuals earning between PKR 10.8 million and PKR 21.6 million per annum, the tax rate is 25%.
• For individuals earning over PKR 21.6 million per annum, the tax rate is 30%.
Tax Deduction at Source (TDS)
TDS is a system in which tax is deducted from the salary of the employee at the time of payment. The employer is responsible for deducting and depositing the tax on behalf of the employee. The rate of TDS depends on the income of the employee and is calculated according to the income tax rates mentioned above.
Tax Return Filing
All salaried individuals in Pakistan are required to file their tax returns by September 30th each year. The tax return should include all sources of income, including salary, and should be filed with the FBR. Filing tax returns on time is important to avoid penalties and fines.
Exemptions and Deductions
There are certain exemptions and deductions available for salaried individuals in Pakistan. These include:
• Deduction for Zakat and donations to charitable organizations.
• Exemption for medical expenses incurred by the employee or his/her dependents.
• Exemption for house rent paid by the employee.
• Deduction for education expenses incurred by the employee or his/her dependents.