Salaried employee? Read our complete income tax on salary Pakistan 2026 guide covering exempt allowances, IRIS filing steps, and refund claims.
FBR's income tax slabs for Tax Year 2026 (July 1, 2025 – June 30, 2026) determine how much income tax you owe on your salary, business income, or other earnings. This guide covers the complete slab table for salaried individuals, business persons, and AOPs — plus how to calculate your actual tax liability.Kamboh Associates provides expert FBR tax compliance services in Pakistan. Income tax filing from Rs. 3,500, NTN registration from Rs. 2,000, company incorporation from Rs. 15,000. WhatsApp 0328-4675162.
Income Tax Slabs for Salaried Individuals — Tax Year 2026
Salaried taxpayers have separate (more favorable) tax slabs compared to business individuals. These rates apply to salary income as defined under Section 12 of the Income Tax Ordinance 2001:
| Annual Taxable Income (Rs.) | Tax Rate | Fixed Amount |
|---|---|---|
| Up to 600,000 | 0% | Nil |
| 600,001 – 1,200,000 | 5% | Nil + 5% above Rs. 600,000 |
| 1,200,001 – 2,200,000 | 15% | Rs. 30,000 + 15% above Rs. 1,200,000 |
| 2,200,001 – 3,200,000 | 25% | Rs. 180,000 + 25% above Rs. 2,200,000 |
| 3,200,001 – 4,100,000 | 30% | Rs. 430,000 + 30% above Rs. 3,200,000 |
| Above 4,100,000 | 35% | Rs. 700,000 + 35% above Rs. 4,100,000 |
Important: These slabs apply to taxable income — after deducting allowable expenses, allowances, and deductions. Your gross salary ≠taxable income.
Income Tax Slabs for Business Individuals & AOPs — Tax Year 2026
Non-salaried individuals (freelancers, sole proprietors, business owners) and Associations of Persons (AOPs) follow slightly different slabs:
| Annual Taxable Income (Rs.) | Tax Rate | Fixed Amount |
|---|---|---|
| Up to 600,000 | 0% | Nil |
| 600,001 – 1,200,000 | 15% | Nil + 15% above Rs. 600,000 |
| 1,200,001 – 1,600,000 | 20% | Rs. 90,000 + 20% above Rs. 1,200,000 |
| 1,600,001 – 3,200,000 | 30% | Rs. 170,000 + 30% above Rs. 1,600,000 |
| 3,200,001 – 5,600,000 | 40% | Rs. 650,000 + 40% above Rs. 3,200,000 |
| Above 5,600,000 | 45% | Rs. 1,610,000 + 45% above Rs. 5,600,000 |
Corporate Tax Rate — Companies (Tax Year 2026)
| Entity Type | Tax Rate |
|---|---|
| SECP company registration Company (Pvt. Ltd.) | 29% |
| Public Listed Company | 29% |
| Small Company (turnover below Rs. 250M) | 20% |
| Banking Company | 39% |
How to Calculate Your Income Tax — Example
Let's calculate tax for a salaried person with annual income of Rs. 2,500,000:
| Step | Calculation | Amount (Rs.) |
|---|---|---|
| Gross annual salary | Given | 2,500,000 |
| Less: Medical allowance (10% of basic) | Deductible | (100,000) |
| Taxable income | 2,500,000 – 100,000 | 2,400,000 |
| Tax on first Rs. 2,200,000 | Fixed from slab table | 180,000 |
| Tax on Rs. 200,000 (above 2.2M at 25%) | 200,000 × 25% | 50,000 |
| Total Tax Liability | 230,000 |
Effective rate: Rs. 230,000 ÷ Rs. 2,500,000 = 9.2%. Even though you fall in the 25% slab, your effective (average) rate is much lower because lower slabs are taxed at lower rates.
Tax-Exempt Income — What is Not Taxable
- Agricultural income (exempt under provincial laws)
- Gratuity up to Rs. 300,000 (approved gratuity fund)
- Provident fund contributions and withdrawals (approved funds)
- Scholarships and education grants
- Pension income from approved pension funds
- Foreign remittances received in Pakistan (salary paid in foreign currency and remitted)
Reducing Your Tax — Legal Deductions
| Deduction | Section | Limit |
|---|---|---|
| Pension fund / annuity contribution | 63 | 20–40% of taxable income (age-based) |
| Investment in listed shares / mutual funds | 62 | Tax credit 15% on up to Rs. 1.5M |
| Donation to approved institutions | 61 | 30% of taxable income |
| Medical allowance | Schedule I | Up to 10% of basic salary (exempt) |
Frequently Asked Questions
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WhatsApp 0328-4675162Income Tax in Pakistan — Comprehensive 2026-27 Guide
Pakistan's income tax system is governed by the Income Tax Ordinance 2001 (amended through Finance Acts). The tax year runs from July 1 to June 30, and returns are due by September 30. Understanding how income is classified and taxed is essential for every salaried person, business owner, and investor.
Tax Slabs 2026-27 — Salaried Individuals
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to Rs.600,000 | 0% |
| Rs.600,001 to Rs.1,200,000 | 2.5% of amount exceeding Rs.600,000 |
| Rs.1,200,001 to Rs.2,200,000 | Rs.15,000 plus 12.5% exceeding Rs.1,200,000 |
| Rs.2,200,001 to Rs.3,200,000 | Rs.140,000 plus 20% exceeding Rs.2,200,000 |
| Rs.3,200,001 to Rs.4,100,000 | Rs.340,000 plus 25% exceeding Rs.3,200,000 |
| Rs.4,100,001 to Rs.6,000,000 | Rs.565,000 plus 32.5% exceeding Rs.4,100,000 |
| Above Rs.6,000,000 | Rs.1,182,500 plus 35% exceeding Rs.6,000,000 |
Tax Exemptions and Deductions Available
- Zakat paid through official channels — fully deductible
- Donations to approved NPOs/NGOs — up to 30% of taxable income
- Medical allowance — exempt up to 10% of basic salary (if not on medical scheme)
- Life insurance premium — 100% deductible (if eligible plan)
- Pension contributions — deductible under Section 60
Tax Credits That Reduce Your Tax Bill
Unlike deductions (which reduce income), tax credits reduce the tax itself:
- Section 62 — Investment in shares/equity mutual funds: credit up to Rs.150,000
- Section 63 — Contribution to approved pension fund: up to 20% of income for under-40s
- Section 64 — Premium on life insurance / health insurance: deductible
How to File Your Income Tax Return
- Login to IRIS (iris.fbr.gov.pk) with your NTN and password
- Select the relevant tax year from the Returns menu
- Enter income details across all categories (salary, business, property, capital gains)
- Complete wealth statement (assets and liabilities as of June 30)
- Review tax computation and pay any balance due via CPR challan
- Submit and save your acknowledgment receipt
Kamboh Associates provides end-to-end income income tax return filing. Call 0328-4675162 for same-day filing service.
Frequently Asked Questions — Income Tax Pakistan 2026
Who is required to file an income tax return in Pakistan?
Under Section 114 of the Income Tax Ordinance, you must file a return if: your income exceeds Rs.600,000 in a year; you own immovable property with an area of 500 square yards or more; you own a motor vehicle with engine capacity of 1000cc or above; you have obtained a commercial or industrial electricity connection; you are registered for sales tax; or you have received a prize bond prize above Rs.10,000. Even if none of these apply, filing a return helps you get on the ATL and reduces withholding taxes.
What is the deadline to file income tax return in Pakistan for 2026?
For individuals (salaried and business), the deadline to file the income tax return for tax year 2026 (July 2025 – June 2026) is September 30, 2026. For companies (AOPs, private limited), the deadline is December 31, 2026. These deadlines can be extended by FBR notification. Late filing after the deadline attracts a penalty of Rs.1,000 per month (individual) or Rs.10,000 per month (company) plus 0.1% of tax per day.
Can I file my own income tax return on IRIS without a consultant?
Yes. FBR's IRIS portal allows individuals to file returns themselves. The process involves: creating an account at iris.fbr.gov.pk using your CNIC, completing the income return form (declaring all income sources), filling in the wealth statement preparation (all assets and liabilities), computing tax, paying via 1-Bill or bank challan if any tax is due, and submitting. However, if you have multiple income sources, foreign assets, business income, or have received notices, professional help is strongly recommended to avoid errors.
What is the wealth statement and who must file it?
The wealth statement (filed under Section 116) is a declaration of all your assets and liabilities as of June 30 of the tax year. Everyone who files a return must also file the wealth statement. It includes: property (residential, commercial, agricultural), vehicles, bank balances, investments, business capital, cash in hand, jewelry, and all liabilities (loans, mortgages). The difference between opening and closing wealth should be explainable by your declared income minus living expenses. Unexplained increases trigger notices under Section 111.
How can I reduce my income tax legally in Pakistan?
Legal tax reduction strategies include: investing in approved pension funds (up to 20% of income deductible under Section 63); investing in equity mutual funds or shares listed on PSX (tax credit up to Rs.150,000 under Section 62); paying health/life insurance premiums (deductible under Section 62); making charitable donations to FBR-approved organizations (up to 30% deductible); paying Zakat through official channels (directly deductible from tax); and claiming all legitimate business expenses if self-employed. These strategies can legally reduce your tax bill by Rs.50,000-Rs.300,000 depending on income level.
File Your Income Tax Return — Same Day Service
Kamboh Associates files income tax returns for salaried individuals, freelancers, business owners, and companies. Professional filing starts at Rs.3,000.
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