Income Tax of Pakistan
History and Current Status in Pakistan
Navigating Pakistan’s tax system can be complex, but with TaxAkounting, you have expert guidance every step of the way. We offer a comprehensive range of Pakistan Taxation Services, from registration to tax return filings, ensuring your business and personal tax matters are handled efficiently and in compliance with Pakistan’s tax laws.
History of Income Tax in Pakistan
The concept of income tax in what is now Pakistan traces back to the British colonial era when the Indian Income Tax Act of 1860 was introduced under the British Raj. This law was applicable in the region that included present-day Pakistan.
However, after the creation of Pakistan in 1947, the country continued to use the colonial tax system. In 1951, Pakistan enacted its own Income Tax Ordinance, which was based on the Indian Income Tax Act of 1922. This ordinance laid the foundation for the current tax structure in Pakistan.
In the 1970s, the government of Pakistan took several steps to modernize its tax system. Key reforms included the introduction of progressive tax rates, bringing a wider segment of the population into the tax net, and setting up new tax collection systems.
In 1980, the Income Tax Ordinance of 1979 was introduced, later replaced by the Income Tax Ordinance of 2001. This current ordinance is the primary tax legislation in Pakistan and governs the taxation of individuals, businesses, and other entities.
Current Status of Income Tax in Pakistan
As of today, Pakistan’s income tax system is governed by the Income Tax Ordinance of 2001, along with various amendments and updates introduced over the years. The taxation system in Pakistan is administered by the Federal Board of Revenue (FBR), which is responsible for tax collection, enforcement, and regulation.
1. NTN Registration for Salaried Individuals PKR 200
Salaried individuals earning income are required to register for a National Tax Number (NTN) with the Federal Board of Revenue (FBR). We assist salaried individuals in obtaining their NTN, ensuring that their tax obligations are met.
Our Service Includes:
- Evaluation of tax registration requirements
- Preparation and submission of NTN registration application
- Guidance on tax obligations for salaried individuals
Required Documents:
- • Copy of CNIC
- • Salary details and employment documentation
- • Bank account information
2. NTN Registration for Business Individuals PKR 2000/-
Individuals running businesses must obtain an NTN for tax purposes. Whether you are a sole proprietor or a freelancer, we help you register for NTN, making sure your business complies with Pakistan’s tax laws.
Our Service Includes:
- Assessment of business tax registration requirements
- Preparation and submission of NTN registration application
- Guidance on tax deductions and filing obligations
Requirements:
- • Copy of CNIC
- • Business registration details
- • Proof of business address
- • Bank account information
3. Annual Tax Return Filing – Salaried
Salaried individuals must file an annual income tax return with FBR to declare their income and taxes paid. Our Annual Tax Return Filing service ensures accurate filing for salaried individuals, reducing the risk of fines and penalties.
Our Service Includes:
- Preparation and filing of income tax returns
- Income and deduction analysis
- Maximizing tax refunds and minimizing liabilities
- Filing before the due date to avoid penalties
Requirements:
- • CNICs of all directors and shareholders
- • Company name and business activity details
- • Paid-up capital and shareholding structure
4. Annual Tax Return Filing – Business Individuals
Business owners, freelancers, and self-employed individuals must file annual income tax returns to declare their business profits and expenses. We assist in preparing and filing these returns to ensure compliance with Pakistan’s taxation laws.
Our Service Includes:
- Preparation of tax returns based on business income
- Advice on allowable expenses and deductions
- Filing tax returns on time
- Ensuring business tax efficiency
Required Documents:
- • Financial statements (balance sheet, profit & loss)
- • Taxable income and expense records
- • Bank statements and tax invoices
- • Previous tax return filings (if applicable)
5. Annual Tax Return Filing – Partnership / AOP (Association of Persons)
Partnerships and Associations of Persons (AOPs) must file their annual tax returns to declare their combined income. Our service ensures that all partners’ income and deductions are correctly reported to FBR.
Our Service Includes:
- Preparation and filing of partnership/AOP tax returns
- Distribution of income and tax liability among partners
- Advice on the tax implications of partnership agreements
- Filing before the due date to avoid penalties
Requirements:
- • Partnership agreement or AOP registration details
- • Financial statements of the partnership
- • Income and expense records
6. Annual Tax Return Filing – Private Limited Company
Private limited companies are required to file annual tax returns with the FBR to report their income, expenses, and tax liabilities. We assist private companies in filing accurate returns, ensuring compliance with corporate tax laws.
Our Service Includes:
- Preparation and filing of tax returns for private limited companies
- Advice on corporate tax liabilities and available exemptions
- Filing of returns on time
- Assistance in corporate tax planning and strategy
Requirements:
- • Financial statements (income statement, balance sheet)
- • Taxable income and expenses
- • Shareholder information and dividend details
- • Corporate governance and tax-related documents
7. Annual Tax Return Filing – NPO / Charitable Trusts
Non-Profit Organizations (NPOs) and charitable trusts are required to file annual tax returns, even though they may be exempt from certain taxes. We help NPOs and trusts file their returns and maintain compliance with FBR’s requirements.
Our Service Includes:
- Filing of tax returns for NPOs and charitable trusts
- Tax-exemption claims and compliance verification
- Advice on donations and funding requirements
- Ensuring proper documentation for audits and reviews
Requirements:
- • NPO/Trust registration details
- • Financial statements (income, donations, and expenses)
- • Tax exemption application (if applicable)
- • List of trustees or directors
8. Withholding Tax Statement Filing
Withholding Tax Statement Filing is a mandatory requirement for businesses and individuals who deduct taxes at the source, such as on salaries, contracts, or payments for services. The tax withheld must be reported to the Federal Board of Revenue (FBR) through a Withholding Tax Statement.
Our Service Includes:
- Preparation and Filing: We prepare and file monthly, quarterly, or annual withholding tax statements via the FBR Iris Portal.
- Timely Filing: Ensure filing is done within deadlines to avoid penalties and interest.
- Consultancy: We provide expert advice on optimizing withholding tax calculations and reducing tax liabilities.
- Ensuring proper documentation for audits and reviews
Requirements:
- • Tax withheld details (salaries, contracts, payments, etc.)
- • Relevant invoices, receipts, or contracts
- • FBR registration and account details (if applicable)
Why Choose TaxAkounting for Pakistan Tax Services?
- Expert Knowledge – Our team is well-versed in Pakistan’s tax laws and regulations.
- Hassle-Free Filing – We ensure that your tax returns are filed on time with accurate details.
- Tailored Advice – Our services are customized based on your individual or business tax needs.
- Affordable Pricing – Competitive pricing for quality tax services.