Personal Income Tax
Pakistan imposes Personal Income Tax on its residents on a global scale, while non-resident individuals are taxed solely on income originating from within Pakistan. As your Employer of Record in Pakistan BeSpoke Consulting and Training takes care of the Personal Income Tax computations and compliance thereof.
This includes income received or deemed to be received, or deemed to accrue or arise within Pakistan. Salary is considered Pakistan-source income when it pertains to employment conducted in Pakistan, regardless of where it is paid.
Tax Deduction at source from Salary
Tax Deduction at source from Salary is one of mainstream source of revenue for Government and has been consistent in tax collection. Every employer paying salary to an employee shall, at the time of payment, deduct tax from the amount paid at the employee’s average rate of tax computed at the rates specified in Division I of Part I of the First Schedule on the estimated income of the employee chargeable under the head “Salary” for the tax year in which the payment is made
Personal Income Tax Rates/ Tax Rates on Salary Income
For individuals whose income from salary exceeds 75% of taxable income:
Following are the changes in tax laws recently enacted through the Finance Act 2024 that will impact salaried individuals:
| Taxable Income | Rate of Tax |
| Where taxable income does not exceed Rs. 600,000 | 0% |
| Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000 | 5% of the amount exceeding Rs. 600,000 |
| Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,200,000 | Rs. 30,000 + 15% of the amount exceeding Rs. 1,200,000 |
| Where taxable income exceeds Rs. 2,200,000 but does not exceed Rs. 3,200,000 | Rs. 180,000 + 25% of the amount exceeding Rs. 2,200,000 |
| Where taxable income exceeds Rs. 3,200,000 but does not exceed Rs. 4,100,000 | Rs. 430,000 + 30% of the amount exceeding Rs. 3,200,000 |
| Where taxable income exceeds Rs. 4,100,000 | Rs. 700,000 + 35% of the amount exceeding Rs. 4,100,000 |
Withholding Requirements
In general, the entire tax is deducted at the source when paying salaries to individuals at the rates specified above for salaried individuals. Various withholding tax (WHT) rates apply to different goods, services, and contracts provided and executed by individuals and AOPs, based on the vendor’s status as an active taxpayer or not.
