Income Tax Rates in Pakistan – Year 2012

On March 6, 2012, in Tax News, Uncategorized, by Aamir Ilyas

THE FIRST SCHEDULE OF THE INCOME TAX ORDINANCE, 2001

PART – I

Following are the tax rates in Pakistan for the year 2012 ( starting from July 2011 and ending on June 2012)

TAX RATES  FOR BUSINESS INDIVIDUALS

 

S.#

Taxable Income

Rate of tax

1

2

3

Where the taxable income does not exceed Rs. 300,000

0%

2 Where the taxable income exceeds Rs. 300,000 and does not exceed Rs. 500,000

7.50%

3 Where the taxable income exceeds Rs. 500,000 but does not exceed Rs. 750,000

10%

4 Where the taxable income exceeds Rs. 750,000 but does not exceed Rs. 1,000,000

15%

5 Where the taxable income exceeds Rs. 1,000,000 but does not exceed Rs. 1,500,000

20%

6 Where the taxable income exceeds Rs. 1,500,000

25%

 

AN INDIVIDUAL CHARGEABLE UNDER THE HEAD SALARY – TAX ON SALARY INCOME – YEAR 2012

            Where the income of an individual chargeable under the head “salary” exceeds fifty percent of his taxable income, the rates of tax to be applied shall be as set out in the following table namely:-

S.#

Taxable Income

Rate of tax

1

2

3

2 Where the taxable income does not exceed Rs. 300,000

0%

3 Where the taxable income exceeds Rs. 300,000 and does not exceed Rs. 350,000

0.75%

4 Where the taxable income exceeds Rs. 350,000 but does not exceed Rs. 400,000

1.50%

5 Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 450,000

2.50%

6 Where the taxable income exceeds Rs. 450,000 but does not exceed Rs. 550,000

3.50%

7 Where the taxable income exceeds Rs. 550,000 but does not exceed Rs. 650,000.

4.50%

8 Where the taxable income exceeds Rs. 650,000 but does not exceed Rs. 750,000

6.00%

9 Where the taxable income exceeds Rs. 750,000 but does not exceed Rs. 900,000.

7.50%

10 Where the taxable income exceeds Rs. 900,000 but does not exceed Rs. 1,050,000

9.00%

11 Where the taxable income exceeds Rs. 1,050,000 but does not exceed Rs. 1,200,000.

10.00%

12 Where the taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,450,000

11.00%

13 Where the taxable income exceeds Rs. 1,450,000 but does not exceed Rs. 1,700,000.

12.50%

14 Where the taxable income exceeds Rs. 1,700,000 but does not exceed Rs. 1,950,000

14.00%

15 Where the taxable income exceeds Rs. 1,950,000 but does not exceed Rs. 2,250,000.

15.00%

16 Where the taxable income exceeds Rs. 2,250,000 but does not exceed Rs. 2,550,000

16.00%

17 Where the taxable income exceeds Rs. 2,850,000 but does not exceed Rs. 3,550,000.

17.50%

18 Where the taxable income exceeds Rs. 3,550,000 but does not exceed Rs.4,550,000.

18.50%

19 Where the taxable income exceeds Rs. 4,550,000.

20.00%


RATES OF TAX FOR ASSOCIATION OF PERSONS

           The rate of tax imposed on the taxable income of Association of Persons for the tax year 2010 and onward shall be 25%.

RATES OF TAX FOR COMPANIES

The rate of tax imposed on the taxable income of a company for the tax year 2007 and onward shall be 35%.

Where the taxpayer is a small company as defined in section 2, tax shall be payable at the rate of 25%.

RATE OF DIVIDEND TAX

The rate of tax imposed under section 5 on (dividend) received from a company shall be 10%

RATE OF TAX ON CERTAIN PAYMENTS TO NON-RESIDENTS

The rate of tax imposed under section 6 on payments to non-residents shall be 15% of the gross amount of the royalty or fee for technical services.

RATE OF TAX ON SHIPPING OR AIR TRANSPORT INCOME OF A NON-RESIDENT PERSON

The rate of tax imposed u/s 7 shall be:-

a).     In the case of shipping income, 8% of the gross amount received or receivable; or

b).     In the case of air transport income, 3% of the gross amount received or receivable.

RATE OF TAX FOR INCOME FROM PROPERTY

a).        The rate of tax to be paid u/s 15, In the case of individual and association of persons, shall be:-

S.#

Gross amount of rent

Rate of Tax

1

2

3

Where the gross amount of rent does not exceed Rs. 150,000 Nil
Where the gross amount of rent exceeds Rs.150,000 but does not exceed Rs.400,000 5% of the gross amount exceeding Rs. 150,000.
Where the gross amount of rent exceeds Rs.400,000 but does not exceed Rs. 1,000,000 Rs. 12,500 plus 7.5% of the gross amount exceeding Rs.400,000
Where the gross amount of rent exceeds Rs.1,000,000 Rs.57,500 plus 10% of the gross amount exceeding Rs.1,000,000
Where the taxable income exceeds Rs. 1,000,000 but does not exceed Rs. 1,500,000 20%
Where the taxable income exceeds Rs. 1,500,000 25%

 

 

 

 

 

 

 

 

b).        The rate of tax to be paid u/s 15, in the case of company, shall be:-

S.#

Gross amount of rent

Rate of Tax

1

2

3

Where the gross amount of rent does not exceed Rs. 400,000 5% of the gross amount of rent.
Where the gross amount of rent exceeds Rs.400,000 but does not exceed Rs.1,000,000 Rs. 20,000 plus 7.5% of the gross amount of rent exceeding Rs.400,000
Where the gross amount of rent exceeds Rs.1,000,000. Rs. 65,000 plus 10% of the gross amount of rent exceeding Rs.1,000,000.

 

CAPITAL GAINS ON DISPOSAL OF SECURITIES

             The rate of tax to be paid u/s 37A shall be as follows:-

S.#

Period

Tax Year

Rate of Tax

1

2

3

4

1 Where holding period of a security is less than six months

2011

2012

2013

2014

2015

10%

10%

12.5%

15%

17.5%

2 Where holding period of a security is six months or more but less than twelve months.

2011

2012

2013

2014

2015

2016

7.5%

8%

8.5%

9%

9.5%

10%

3 Where holding period of a security is one year or more.

-

0%

 

 

 

 

 

 

 

 

 

 

 

 

Provided that a mutual fund or a collective investment scheme shall deduct Capital Gains Tax at the rates as specified above, on redemption of securities as prescribed.

Asim says:

I have rented out a shop on 25000 monthly (300000 pa.). I am confused, what will be the payable tax amount.

Waqas says:

“RATE OF TAX ON CERTAIN PAYMENTS TO NON-RESIDENTS
The rate of tax imposed under section 6 on payments to non-residents shall be 15% of the gross amount of the royalty or fee for technical services.”
Does this apply to foreign vendors as well. e.g. a Business has subscribed to services offered by different businesses in order to manage / operate its own business. e.g. subscription to Skype Accounts, Termination and origination for international calling, Online Fax Services, Online webinar and Meeting Accounts, and paying to hired independent contractors from Abroad (outside Pakistan)?? where the only mode of payment acceptable to these vendors / providers is payment through credit card? and usually they charge a fix service? How can a business deduct tax on such payments? does that add any liability to a business for not deducting Tax on payments as mentioned above?
Also, I reckon! there are different treaties signed between countries for Tax deduction purposes. What if a treaty forbids business in Pakistan to deduct tax for a non resident, hired contractor / employee?
please clarify!

Aamir Ilyas says:

you are required to consult your nearest Regional Tax Office. some non residents have Permanent Establishments (PE) in Pakistan and taxation of PE is different. Almost all tax treaties cover payment on account of Fee for technical services like if you pay technical fee to consultant residing in Singapore I think rate is 10% so it is advised to go through tax treaty first.

Waqas says:

I am a little confused can you please advise on the following:

1. ” Where the income of an individual chargeable under the head “salary” exceeds fifty percent of his taxable income,” can you please elaborate on that?

e.g. If a person receives income in form of Salary and pays taxes on that already but also receives income in form of foreign remittances from Consultancy services in the IT sector exclusively to offshore clients. how would his tax be calculated?

,
2. If income from business of an individual where a business is either sole proprietor ship or Partnership and source of revenue is exclusively from export of services, Would the above rates under tax schedule for business individuals still apply to the person? or would he be subjected to advance tax (of around 1% if i am not wrong for inward remittances)?

Please clarify.

Aamir Ilyas says:

if you are earning 1 lac from business and receiving 1.5 lac on account of salary, it means your salary exceeds 50 of your total income and in this case salary rates will be applicable. If salary income is less than 50% of your total income than business income rate will be applicable.
Export of IT services is exempt so you may mention this income as exempt income in your return.

Waqas says:

Thank you for taking the time to explain this. I also posted another question. Can you please enlighten me on that?

also, considering the scenario below, if IT services are exempted in both personal and business capacity. then should only salary tax be applicable to me for the salary I receive from my employer?

Thanks,

Waqas

Laique Alam says:

very nice much appreciated

Liaqat Ali says:

how do we define “taxable income” ? what all is exempted?

hanif says:

Very informative – thanks a lot !

Altafkan says:

the tax rate of 20% for the bracket of 450000-550000 is exhilarating. Is it true or needs correction?

Aamir Ilyas says:

corrected. Thank you

Mumtazbohio says:

good info



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