Income tax is applicable on everyone who is making a living, but due to a general lack of awareness, most people don’t file returns for their income. With a population of over 190 million, around a mere 1 percent of the Pakistani citizens file their income tax returns.

This tends to create problems for the government as well. A big majority of citizens are subjected to withholding taxes to forcefully obtain taxes on all spending and people end up paying their share of income tax regardless of whether they submit income returns or not. In most cases, people are subjected to taxes even if they don’t even qualify as a taxpayer for income purposes.

In order to ensure that as a taxpayer, you aren’t subjected to more than your fair share of them, the solution is to submit your tax returns so that you can apply for a refund on your withholding taxes. However before that, you will need to know if you are subject to the tax and how much is applicable to you.

Let’s find out how much you need to pay based on what you earn in a year.

For Salaried Individuals

This one is for those who are working on a salary.

In order to assist you, in working out your taxable income, we have shared below a list of annual income tax slabs for salaried individuals based on their earning level and the applicable tax:

Income under Rs. 400,000 – No tax applicable

Income between Rs. 400,001-500,000: Tax is 2% on the amount above Rs. 400,000

Income between Rs. 500,001-750,000: Tax is Rs. 2,000 + 5% on the amount above Rs. 500,000

Income between Rs. 750,001-1,400,000: Tax is Rs. 14,500 + 10% on the amount above Rs. 750,000

Income between Rs. 1,400,001-1,500,000: Tax is Rs. 79,500 + 12.5% on the amount above Rs. 1,400,000

Income between Rs. 1,500,001-1,800,000: Tax is Rs. 92,000 + 15% on the amount above Rs. 1,500,000

Income between Rs. 1,800,001-2,500,000: Tax is Rs. 137,000 + 17.5% on the amount above Rs. 1,800,000

Income between Rs. 2,500,001-3,000,000: Tax is Rs. 259,500 + 20% on the amount above Rs. 2,500,000

Income between Rs. 3,000,001-3,500,000: Tax is Rs. 359,500 + 22.5% on the amount above Rs. 3,000,000

Income between Rs. 3,500,001-4,000,000: Tax is Rs. 472,000 + 25% on the amount above Rs. 3,500,000

Income between Rs. 4,000,001-7,000,000: Tax is Rs. 597,000 + 27.5% on the amount above Rs. 4,000,000

Income exceeds Rs. 7,000,000: Tax is Rs. 1,422,000 + 30.0% on the amount above Rs. 7,000,000

For Self-Employed Individuals or Freelancers

People who make their earning independent of an employer or do freelance work are subjected to higher income tax under the Pakistan government’s Income Tax Ordinance 2001.

The list is of annual income slabs and respective applicable tax is shown below:

Income under Rs. 400,000 – No tax applicable

Income between Rs. 400,001-500,000: Tax is 7% on the amount above Rs. 400,000

Income between Rs. 500,001-750,000: Tax is Rs. 7,000 + 10% on the amount above Rs. 500,000

Income between Rs. 750,001-1,500,000: Tax is Rs. 32,000 + 15% on the amount above Rs. 750,000

Income between Rs. 1,500,001-2,500,000: Tax is Rs. 144,500 + 20% on the amount above Rs. 1,500,000

Income between Rs. 2,500,001-4,000,000: Tax is Rs. 344,500 + 25% on the amount above Rs. 2,500,000

Income between Rs. 4,000,001-6,000,000: Tax is Rs. 719,400 + 30% on the amount above Rs. 4,000,000

Income exceeds Rs. 6,000,000: Tax is Rs. 1,319,000 + 35.0% on the amount above Rs. 7,000,000

Note: The above income slabs and the applicable taxes are on annual basis.

Note 2: Taxed individuals might also have rebates on their income based on certain criteria or field of work.

Note 3: Any withholding tax you have paid will be subtracted from your taxable income.

Note 4: Salaried individuals need to ask their employer for evidence (annual pay slip) before submitting tax returns as employers deduct taxes when salary is paid.

Note 5: Businessmen are taxed at different rates than salaried or non-salaried individuals as their income is taxed at variable rates depending on the type of business. Businessmen should head to FBR’s website for more details concerning their tax rates.