The Finance Act 2026 sets the tax rules for Pakistan’s Tax Year 2026-27 (1 July 2026 to 30 June 2027). This guide breaks down the new salaried and business slabs, withholding-tax revisions, and the compliance changes that affect every filer. Each figure is flagged for verification against the official FBR notification.
Salaried slabs verified: Finance Act 2026 (Finance Bill 2026-27 passed National Assembly, June 2026). Business income slabs, withholding rates, and deadlines: confirm with a consultant or at fbr.gov.pk before filing. Individual figures still flagged [VERIFY] where not yet confirmed.
New Income Tax Slabs for Salaried Individuals
The headline change in the Finance Act 2026 is the revised salaried income tax slab structure. The basic exemption threshold remains at Rs. 600,000 per year, with progressive rates applying above it. The table below shows the slabs used throughout our calculators.
| Annual Taxable Income (Rs.) | Tax Rate | Fixed Tax (Rs.) |
|---|---|---|
| 0 – 600,000 | 0% | 0 |
| 600,001 – 1,200,000 | 5% of amount over 600,000 | 0 |
| 1,200,001 – 2,200,000 | 15% of amount over 1,200,000 | 30,000 |
| 2,200,001 – 3,200,000 | 25% of amount over 2,200,000 | 180,000 |
| 3,200,001 – 4,100,000 | 30% of amount over 3,200,000 | 430,000 |
| Above 4,100,000 | 35% of amount over 4,100,000 | 700,000 |
[VERIFY: Finance Act 2026] Salaried individual slabs, Tax Year 2026-27. Confirm at fbr.gov.pk.
What is the income tax exemption limit in Pakistan for 2026-27?
Annual salaried income up to Rs. 600,000 is exempt from income tax for Tax Year 2026-27. [VERIFY: Finance Act 2026]
The 600,000 exemption threshold has held, but the steeper jump in the middle slabs means salaried professionals earning Rs. 1.2m–3.2m feel the biggest pinch. If your employer is not adjusting monthly withholding correctly, you can end up over-deducted — always reconcile against the annual slab. [VERIFY: Finance Act 2026]
Business Income & AOP Rates
Individuals and Associations of Persons (AOPs) running a business follow a separate slab schedule. Top marginal rate reaches 35% on income above Rs. 6,000,000. [VERIFY: Finance Act 2026]
| Business Income (Rs.) | Rate |
|---|---|
| 0 – 600,000 | 0% |
| 600,001 – 1,200,000 | 1% |
| 1,200,001 – 2,200,000 | 11% |
| 2,200,001 – 3,200,000 | 20% |
| 3,200,001 – 4,100,000 | 25% |
| 4,100,001 – 5,600,000 | 29% |
| 5,600,001 – 7,000,000 | 32% |
| Above 7,000,000 | 35% |
[VERIFY: Finance Act 2026] Business/AOP slabs, TY 2026-27.
Withholding Tax Changes
The gap between filer and non-filer withholding rates has widened again, reinforcing the cost of staying off the Active Taxpayers List (ATL). Cash withdrawals, property transactions and vehicle registration all carry higher non-filer rates. Use our filer vs non-filer calculator to estimate the difference on a specific transaction.
How much more tax do non-filers pay in Pakistan?
Non-filers pay roughly double the withholding rate of filers on most transactions, and face additional advance taxes on property and vehicles. [VERIFY: Finance Act 2026 withholding schedule]
Surcharge & Special Levies
High-income earners may be subject to an additional surcharge above defined thresholds. Confirm the exact rate and threshold against the Act before planning. [VERIFY: Finance Act 2026 surcharge clause]
Key Compliance Changes
- Stricter ATL late-filing surcharge to appear on the active list. [VERIFY]
- Expanded documentation requirements for certain expense claims. [VERIFY]
- Continued push toward the IRIS digital filing ecosystem — see our IRIS filing guide.