WHAT ARE THE TYPES OF TAX PAYERS IN PAKISTAN?

by Tax

The Government of Pakistan collects taxes through the Federal Board of Revenue (FBR), which is responsible for implementing tax laws, collecting federal taxes, and regulating the national tax system. These taxes are used to fund the operations of the government, including public sector development, infrastructure, defense, education, and healthcare.

In Pakistan, different types of taxpayers are categorized based on their legal status, nature of income, and source of earnings. Each category is treated differently under the Income Tax Ordinance, 2001, and is subject to specific tax rates and compliance requirements. These classifications help the FBR ensure accurate tax collection and monitoring of economic activity. Below are the main types of taxpayers in Pakistan:

• Individual Taxpayers:
An individual taxpayer is a natural person who earns income through any legal means such as employment, business, property, capital gains, dividends, or freelancing. Income tax on individuals is applied according to progressive tax slabs ranging from 0% to 35% (as per Tax Year 2025).
Examples include:

  • Salaried employees

  • Freelancers and consultants

  • Shopkeepers and sole proprietors

  • Professionals like doctors, engineers, and lawyers
    Filing an income tax return and wealth statement is mandatory for individuals exceeding the minimum taxable threshold, which is currently PKR 600,000 per annum for salaried individuals and PKR 400,000 for business income.

• Association of Persons (AOPs):
An Association of Persons (AOP) is a group of individuals or entities formed to conduct a joint business or activity. The AOP is treated as a separate taxable entity. The income earned by the AOP is taxed according to slab rates prescribed for AOPs.
Examples include:

  • Unregistered partnerships

  • Joint ventures

  • Family businesses operating without incorporation
    Members of the AOP may also need to declare their share of profit in their personal income tax returns.

• Companies:
Companies in Pakistan are legal persons separate from their owners and shareholders. They are taxed at corporate rates based on their type and activity.
Types of companies include:

  • Private Limited Companies (PLCs)

  • Public Limited Companies

  • Single Member Companies (SMCs)

  • Not-for-profit companies registered under Section 42
    For Tax Year 2025:

  • Standard corporate tax rate is 29%

  • Banking companies pay 39%

  • Small companies (meeting certain thresholds) are taxed at 20%
    Companies must file audited financial statements along with corporate income tax returns and comply with withholding tax requirements.

• Partnership Firms:
Partnership firms are businesses jointly owned by two or more individuals who share profits and losses. In Pakistan, they are taxed as AOPs under the Income Tax Ordinance.
Types include:

  • General Partnerships

  • Limited Liability Partnerships (LLPs)

  • Limited Partnerships
    The firm files a return, and the individual partners also reflect their respective shares in their personal returns. LLPs must also be registered with the SECP.

• Non-Resident Taxpayers:
Non-resident taxpayers are individuals or entities that do not reside in Pakistan but derive income from within the country. Tax is levied only on Pakistan-source income.
Examples include:

  • Foreign companies with a permanent establishment in Pakistan

  • Individuals earning rent from Pakistani property

  • Foreigners providing digital or technical services

  • Non-residents investing in Pakistani stock markets
    Withholding tax is often the main collection method. If a Double Taxation Treaty (DTT) exists between Pakistan and the taxpayer’s country, tax credits or reduced rates may apply.

• Trusts:
A trust is a legal arrangement in which a person (trustee) holds property or income for the benefit of another (beneficiary). Trusts can be taxed as separate entities based on the income they generate.
Types of trusts:

  • Charitable trusts (may get exemptions under Section 100C if conditions are met)

  • Private/family trusts

  • Religious trusts
    If not exempt, income is taxed at slab rates applicable to AOPs or under special provisions.

• Clubs, Societies, and Other Similar Organizations:
These are non-profit associations formed for social, cultural, recreational, or professional purposes. If these organizations earn any income from subscriptions, investments, or services, they may be subject to taxation.
Examples include:

  • Sports clubs

  • Cultural societies

  • NGOs with partial commercial operations
    Such entities must file annual tax returns. They can also apply for tax exemption if they fulfill the relevant requirements under tax laws and SECP regulations.

Benefits of Being on the Active Taxpayers List (ATL):
Taxpayers whose names appear on the FBR’s Active Taxpayers List enjoy the following advantages:

• Lower tax deduction on bank profits and cash withdrawals
• Reduced withholding tax on registration and transfer of vehicles
• Lower advance tax rates on property transactions
• Reduced capital gains tax on sale of securities
• Lower withholding tax on dividends and prize bond winnings
• Eligibility for refunds of excess tax paid
• Preference in government contracts and tenders
• Avoidance of higher penalties and enforcement actions

To remain on the ATL, timely filing of income tax returns is mandatory. The ATL is updated weekly and publicly available on the FBR website.

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WHAT ARE THE TYPES OF TAXES IN PAKISTAN?

by FBRIRIS 2.0Tax

Domestic Taxes, comprising Income Tax, Sales Tax, and Federal Excise Duty, constitute about 90% of the revenue collected by the Federal Board of Revenue (FBR). These taxes are not only similar in essence but are also interdependent in practice. Below are key taxes collected by the Government of Pakistan, including updates based on the latest tax regulations and budget announcements for the fiscal year 2024–25:

• Income Tax: Income tax is imposed on individuals, associations of persons (AOPs), and companies based on their income level. For the tax year 2025, individual tax rates range from 0% to 35%, and corporate tax rates vary between 29% and 39%, depending on business structure and industry. All taxpayers are required to file income tax returns and, where applicable, wealth statements annually.

• Sales Tax: Sales tax is levied on the supply of goods at a federal level and on services at the provincial level. The standard federal sales tax rate is now 18%, as increased in the 2024 Finance Act. Provincial sales tax rates on services vary from 13% to 16% depending on the province.

• Federal Excise Duty (FED): This duty is imposed on certain goods (like cigarettes, beverages, cement, and petroleum products) and services (e.g., air travel and telecom). Rates are product-specific. For example, FED on sugary drinks is now 20%, and on tobacco products it exceeds 30%.

• Customs Duty: Customs duty applies to imported goods under the Customs Act, 1969. Rates can range from 0% to 50% based on the nature, classification, and origin of the goods. Goods from countries under Free Trade Agreements (like China) may be exempted or have reduced duty.

• Agricultural Income Tax: This is a provincial tax on income from agricultural land. It is levied at rates typically ranging from 5% to 10%, depending on the size of landholding and income level. Agricultural income is exempt from federal income tax only if documented per provincial laws.

• Withholding Tax: WHT is deducted at the source on transactions such as contracts, dividends, salaries, and banking transactions. For example, dividend WHT is 15% for Active Taxpayers and 30% for non-ATL persons. It is the largest contributor to direct tax collection in Pakistan.

• Property Tax: Property tax is levied by provincial governments based on the annual rental value or area of a property. Rates vary significantly between urban and rural areas and by province. For instance, in Punjab, the property tax ranges from 5% to 20% of the annual rental value.

• Capital Value Tax (CVT): CVT is imposed by the federal government at 1% of the fair market value of property located in urban areas, applicable on transactions above PKR 50 million. Some provincial governments also levy their own CVT on immovable property.

• Token Tax: Token tax is charged on motor vehicles either annually or at the time of registration. The rate depends on engine capacity, vehicle type (private/commercial), and whether the vehicle is locally assembled or imported. Hybrid/electric vehicles may have reduced token tax.

• Professional Tax: This is a provincial tax levied annually on salaried professionals and self-employed individuals such as doctors, lawyers, consultants, and contractors. The tax amount ranges from PKR 500 to PKR 100,000, depending on income level and profession type.

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WHAT IS TAX(PAKISTAN)?

by FBRTax

In Pakistan, tax is a compulsory financial charge or levy imposed by the government on individuals, businesses, and other entities to fund public services, infrastructure, defense, and other state functions. Taxes are governed primarily under the Income Tax Ordinance, 2001, Sales Tax Act, 1990, and Federal Excise Act, 2005, among others.

There are two main types of taxes in Pakistan: Direct Taxes and Indirect Taxes.

Types of Taxes in Pakistan

1. Direct Taxes
Direct taxes are levied directly on individuals and organizations based on income or wealth. The major types include:
• Income Tax – charged on income earned by individuals, companies, and AOPs.
• Capital Gains Tax (CGT) – applicable on the sale of securities, property, or other capital assets.
• Withholding Tax – deducted at source on payments like salaries, contracts, rent, dividends, etc.

2. Indirect Taxes
Indirect taxes are collected through the sale of goods and services and passed on to the government by intermediaries (e.g., sellers or service providers). These include:
• Sales Tax – generally 18%, levied on the sale and import of goods and services.
• Federal Excise Duty (FED) – imposed on specific goods (e.g., tobacco, beverages) and services.
• Customs Duty – charged on imported goods at various rates.

Who Collects Taxes in Pakistan

Tax collection is managed by the Federal Board of Revenue (FBR) at the federal level. Additionally, each province has its own revenue authority:
• Punjab Revenue Authority (PRA)
• Sindh Revenue Board (SRB)
• Khyber Pakhtunkhwa Revenue Authority (KPRA)
• Balochistan Revenue Authority (BRA)

Importance of Paying Taxes

Paying taxes is a civic duty and essential for national development. It enables the government to:
• Build infrastructure (roads, schools, hospitals)
• Fund defense and law enforcement
• Support education, health, and welfare programs
• Maintain economic stability

Common Taxpayer Categories in Pakistan

• Salaried Individuals
• Business Individuals
• Companies (Private/Public Ltd.)
• AOPs (Associations of Persons)
• Non-Resident Pakistanis (on certain incomes)

Filing and Compliance

Individuals and businesses must file annual Income Tax Returns and Wealth Statements (where applicable) through the FBR’s IRIS Portal. Failure to do so can result in fines, penalties, and loss of filer status.

Filer vs. Non-Filer:
Filer status gives taxpayers benefits like lower withholding tax rates, eligibility for government tenders, and other financial advantages.

Conclusion

Taxation in Pakistan is structured to ensure equitable distribution of wealth and to generate revenue for national development. By becoming a tax filer and staying compliant, individuals and businesses contribute to the country’s progress while enjoying legal and financial benefits.

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WHAT ARE THE INCOME TAX RATES IN PAKISTAN

by FBRIRIS 2.0Tax

In Pakistan, the income tax rates for individuals are determined based on the amount of income earned and are progressive in nature. The tax year in Pakistan runs from July 1 to June 30.

Pakistan-source income is defined in Section 101 of the Income Tax Ordinance, 2001, which caters to incomes under different heads and situations. Some of the common Pakistan-source incomes are as under:
• Salary received or receivable from any employment exercised in Pakistan wherever paid;
• Salary paid by, or on behalf of, the Federal Government, a Provincial Government, or a local Government in Pakistan, wherever the employment is exercised;
• Dividend paid by a resident company;
• Profit on debt paid by a resident person;
• Property or rental income from the lease of immovable property in Pakistan;
• Pension or annuity paid or payable by a resident or permanent establishment of a non-resident.

In the Federal Budget 2024–25, the government of Pakistan has retained and adjusted the income tax rates for salaried individuals as follows:

Salaried Individuals (Tax Year 2025):
• For income up to Rs. 600,000, the tax rate is 0%
• For income between Rs. 600,001 and Rs. 1,200,000, the tax rate is 2.5% of the amount exceeding Rs. 600,000
• For income between Rs. 1,200,001 and Rs. 2,400,000, the tax rate is 15% of the amount exceeding Rs. 1,200,000 + Rs. 15,000
• For income between Rs. 2,400,001 and Rs. 3,600,000, the tax rate is 20% of the amount exceeding Rs. 2,400,000 + Rs. 195,000
• For income between Rs. 3,600,001 and Rs. 6,000,000, the tax rate is 25% of the amount exceeding Rs. 3,600,000 + Rs. 435,000
• For income between Rs. 6,000,001 and Rs. 12,000,000, the tax rate is 32.5% of the amount exceeding Rs. 6,000,000 + Rs. 1,035,000
• For income above Rs. 12,000,000, the tax rate is 35% of the amount exceeding Rs. 12,000,000 + Rs. 3,975,000

These rates are applicable to salaried individuals only. For non-salaried individuals, slightly different slabs apply.

Corporate and Business Tax Rates (2024–25):
• Companies (other than banking companies): 29%
• Banking companies: 39%
• Small companies (as defined under Section 2(59A)): 20%
• Associations of Persons (AOPs): Variable rates, subject to final taxation in certain cases.

It’s worth noting that several exemptions and deductions are still available under the Ordinance. These include deductions for:
• Investments in approved pension funds (under VPS Rules)
• Zakat payments
• Charitable donations under Section 61
• Tax credits for health insurance, education, and solar panels

These exemptions can significantly reduce the effective tax liability for compliant taxpayers.

As always, these rates and reliefs are subject to change and it’s recommended to consult with a qualified tax advisor or verify from the Federal Board of Revenue (FBR) for the most recent and applicable updates.

Overall, the income tax structure in Pakistan aims to be progressive and supportive, especially for lower- and middle-income earners, while ensuring revenue generation from high-income groups and corporations.

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HOW TO FILE FBR INCOME TAX RETURN

by FBRIRIS 2.0Tax

HOW TO FILE FBR INCOME TAX RETURN

Filing your Income Tax Return (ITR) with Pakistan’s Federal Board of Revenue (FBR) is a legal obligation and an essential step in responsible financial management. Whether you are salaried, self-employed, a landlord, or a business owner, tax filing is a necessary annual process that helps you remain compliant and eligible for government benefits.

This article provides a step-by-step guide on how to file your tax return through the FBR IRIS portal for the Tax Year 2025.

Why Filing Your Tax Return Is Important

  • It is legally required under the Income Tax Ordinance, 2001

  • Ensures your name appears in the Active Taxpayers List (ATL)

  • Helps avoid higher withholding tax rates on banking, property, and vehicle transactions

  • Required for loan applications, visa processing, and participating in government tenders

  • Builds your credibility and financial history with FBR and banks

  • May entitle you to tax refunds or credits if you’ve overpaid during the year

Who Must File an Income Tax Return in Pakistan?

The following persons or entities must file a tax return:

  • Salaried individuals with income above Rs. 600,000 per year

  • Business owners and freelancers with income over Rs. 400,000 per year

  • Landlords earning rental income

  • Professionals, including doctors, lawyers, consultants, etc.

  • Companies and AOPs (Associations of Persons)

  • Anyone who owns a vehicle above 1000cc, property, or has undertaken foreign travel

  • Anyone issued a notice by FBR to file a return

Step 1: Register with FBR and Obtain NTN

If you’re filing for the first time, you need to create an account and get your National Tax Number (NTN).

  1. Visit: https://iris.fbr.gov.pk

  2. Click on “Registration for Unregistered Person”

  3. Enter your CNIC, email, and mobile number (must be registered in your name)

  4. Once submitted, you will receive login credentials to access the IRIS system

If you already have an NTN but no login access, click on “E-enrollment for Registered Person” to retrieve your IRIS credentials.

Step 2: Gather Required Documents

You’ll need the following documents before filing:

  • CNIC and NTN

  • Salary certificate or payslips (for employees)

  • Bank statements showing transactions and deductions

  • Property documents (if you’re declaring rental income)

  • Business income/expense records (if self-employed or a freelancer)

  • Zakat, donations, or investment records to claim deductions

  • Tax deduction certificates from banks, employers, or mobile companies

  • Utility bills or tenancy agreements for address verification, if needed

Step 3: Log into the IRIS Portal

  • Go to https://iris.fbr.gov.pk

  • Use your CNIC as username and the password received during registration

  • Once logged in, navigate to: Declaration → File Return

Step 4: Choose the Correct Tax Year and Form

  • Select Tax Year 2025 (this covers income from July 1, 2024 to June 30, 2025)

  • Choose the correct form based on your profile:

    • Salaried individuals

    • Business individuals (sole proprietors or freelancers)

    • AOPs or companies

Step 5: Fill the Income Tax Return

The form includes the following key sections:

  • Personal Profile (your CNIC, contact, bank account, and employer details)

  • Salary Income (enter your total annual salary and tax deducted by your employer)

  • Business Income (gross receipts, expenses, and net profit)

  • Rental Income (property location, rent received, and deductions)

  • Capital Gains, Dividends, and Income from Other Sources

  • Tax Deducted at Source (WHT) on bank, utilities, contracts, etc.

  • Tax Credits and Allowable Deductions such as Zakat, donations, VPS contributions

Step 6: File Your Wealth Statement (Mandatory)

Every taxpayer is also required to file a Wealth Statement (Form 116). This includes:

  • All assets you own (property, vehicles, gold, savings, etc.)

  • Liabilities (loans, credit card dues, mortgages)

  • A comparison between opening and closing net wealth for the year

Ensure your declared income supports your increase in net assets, or FBR may issue a notice for discrepancy.

Step 7: Submit and Pay Tax if Due

  • Click on “Calculate” to check if you have any tax payable

  • If tax is due, generate a PSID (Payment Slip ID)

  • Pay the tax via ATM, online banking, mobile wallet (e.g., Easypaisa), or bank

  • Once payment is made, link the PSID in your IRIS portal before final submission

After submission, you will receive an Acknowledgment Receipt confirming your filing.

Step 8: Keep a Copy for Your Records

Always download and save:

  • Acknowledgment Receipt

  • Income Tax Return PDF

  • Wealth Statement PDF

  • Keep digital and hard copies along with supporting documents for 6 years, as FBR may require them during audits

Common Mistakes to Avoid

  • Forgetting to file your Wealth Statement

  • Not reconciling withholding tax with bank statements

  • Using wrong NTN of employer or incorrect income figures

  • Not updating your personal profile (email, phone, address)

  • Missing tax payment before submission

What Happens If You Don’t File?

  • Exclusion from Active Taxpayer List (ATL)

  • Higher withholding tax rates on various financial transactions

  • Penalties starting from Rs. 1,000 up to Rs. 50,000

  • Legal notices or audit selection by FBR

  • Ineligibility for tax refunds and financial clearances

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Taxable Income in PAKISTAN ( What is minimum taxable income in Pakistan?

by FBRTax

Understanding taxable income in Pakistan is essential for every individual, freelancer, and business owner. Whether you earn through salary, business, or investments, the Federal Board of Revenue (FBR) requires you to declare and pay taxes on income that falls within the taxable threshold.

This article explains what qualifies as taxable income in Pakistan, the minimum taxable income limits for 2025, applicable exemptions, and how to calculate your taxable income properly.

What Is Taxable Income?

Taxable income refers to your total income during a tax year, minus allowable deductions, donations, and exemptions. It includes earnings from multiple sources such as salary, business, property, capital gains, and more.

According to Income Tax Ordinance, 2001, taxable income is the amount on which income tax is levied as per prescribed slabs set by the Government of Pakistan.

Minimum Taxable Income in Pakistan (2025)

For Tax Year 2025, the minimum taxable income threshold is as follows:

  • For salaried individuals:
    Income up to Rs. 600,000 per year (Rs. 50,000 per month) is exempt from income tax.
    Any income above Rs. 600,000 is taxable.

  • For business individuals/non-salaried persons (AOPs, freelancers, etc.):
    Income up to Rs. 400,000 per year is exempt from tax.
    Any income above Rs. 400,000 is subject to taxation.

If your annual income exceeds the above thresholds, you must register with FBR, obtain an NTN, and file your income tax return.

What Types of Income Are Taxable in Pakistan?

FBR categorizes taxable income into five heads, each of which is taxed differently. Here’s a breakdown:

1. Salary Income

Includes:

  • Basic salary

  • Bonuses

  • Commissions

  • Leave encashment

  • Allowances (with exceptions)

  • Employer-provided perquisites (car, accommodation)

Tax is calculated using slabs for salaried individuals, and tax is often deducted at source by the employer.

2. Business or Professional Income

This applies to:

  • Sole proprietors

  • Freelancers (IT, digital services, consultants)

  • Retailers or shop owners

  • Traders

  • Partners in AOPs (Associations of Persons)

Tax is calculated after deducting allowable business expenses, depreciation, and admissible deductions.

3. Property (Rental) Income

Taxable if you earn income from:

  • Residential or commercial rental properties

  • Subletting or lease arrangements

Rental income has separate tax slabs, but maintenance and property-related expenses may be deductible.

4. Capital Gains

Income earned through sale or transfer of:

  • Immovable property (plots, homes, commercial buildings)

  • Shares, mutual funds, or other securities

Capital gains tax (CGT) varies based on:

  • Holding period of the asset

  • Type of asset

  • Current CGT rates issued by FBR

5. Income from Other Sources

Includes:

  • Interest on bank deposits

  • Prize bonds

  • Dividends

  • Gifts or windfalls (if not exempt)

These are often subject to withholding tax, and in some cases, final tax regime (FTR) applies.

Exempt and Non-Taxable Income

Not all income is taxable. The following are generally exempt or partially exempt (subject to conditions):

  • Agricultural income (under provincial jurisdiction)

  • Pension received from government sources

  • Foreign remittances through official banking channels

  • Zakat and scholarships

  • Dividend from mutual funds (up to specific limits)

  • Withdrawals from recognized pension schemes

Allowable Deductions from Taxable Income

FBR allows you to reduce your taxable income by claiming:

  • Zakat paid

  • Charitable donations to approved institutions (Section 61)

  • Investment in pension funds (VPS)

  • Profit on debt (home loan interest)

  • Tuition fee (limited to certain cases)

  • Medical allowance (if not reimbursed)

These deductions are declared while filing the income tax return in the deductions and tax credit sections.

How to Calculate Your Taxable Income

Here’s a simple example for a salaried person:

  1. Total Annual Salary Income: Rs. 1,200,000

  2. Less: Zakat paid: Rs. 50,000

  3. Less: Donation to Edhi Foundation: Rs. 50,000

  4. Taxable Income = Rs. 1,100,000

Apply applicable slab on Rs. 1.1 million to calculate payable tax.

Income Tax Slabs (Indicative)
(Subject to updates by FBR in Finance Bill)

  • Rs. 600,000 or less → 0%

  • Rs. 600,001 – 1,200,000 → 2.5% on excess

  • Rs. 1,200,001 – 2,400,000 → 12.5%

  • Rs. 2,400,001 – 3,600,000 → 20%

  • Above → Higher rates apply

Do Freelancers and IT Exporters Pay Income Tax?

Yes, but special tax regimes and exemptions apply.

  • Exporters of software or IT-enabled services may qualify for reduced tax (0.25% to 1%)

  • Must be registered with PSEB and file return annually

  • FBR may require declaration of foreign remittances received via bank

Consequences of Not Declaring Taxable Income

If you don’t declare your taxable income:

  • FBR may issue notices or penalties

  • You may be excluded from ATL

  • Higher withholding taxes will apply on property, banking, and vehicle transactions

  • You can be selected for audit or legal action

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How to File Income Tax Return in PAKISTAN ( How can I file my Income Tax Return by myself?

by FBRIRIS 2.0Tax

Filing your Income Tax Return (ITR) is not just a legal obligation—it’s a vital financial responsibility that enhances your creditworthiness, legal standing, and access to government benefits. Whether you’re a salaried employee, freelancer, business owner, or landlord, this guide will help you file your tax return in Pakistan by yourself through the FBR’s IRIS portal.

Here’s a step-by-step breakdown of how to file your income tax return in Pakistan for Tax Year 2025.

Why Filing a Tax Return Matters

  • Mandatory for individuals earning above the taxable threshold

  • Required for appearing on the Active Taxpayer List (ATL)

  • Helps avoid higher withholding tax rates

  • Needed for loan applications, tenders, and visa processing

  • Ensures compliance with the Income Tax Ordinance, 2001

Step-by-Step Process: How to File Your Income Tax Return

Step 1: Gather All Required Documents

Before you begin, collect all necessary information and documents:

  • CNIC and NTN/TIN

  • Salary certificate or payslips (for salaried individuals)

  • Bank account statements

  • Utility bills, rent receipts, or lease agreements (for rental income)

  • Profit and loss statement (for business owners or freelancers)

  • Zakat, charitable donations, and tax-deductible investments

  • Withholding tax certificates (from banks, mobile operators, etc.)

  • Any foreign income details, if applicable

Step 2: Calculate Your Taxable Income

Add up income from all sources:

  • Salary

  • Business or freelance income

  • Rental income

  • Capital gains (stocks, property)

  • Dividends, interest, and other investments

  • Foreign income (if you’re a resident taxpayer)

Also, deduct:

  • Tax credits and rebates

  • Zakat and donations (approved institutions)

  • Allowable business expenses

Use FBR’s Income Tax Slabs to determine how much tax you owe based on your total taxable income.

Step 3: Register on the FBR IRIS Portal (If Not Already Registered)

To file online, you must be registered on the FBR IRIS portal.

  1. Visit: https://iris.fbr.gov.pk

  2. Click on “Registration for Unregistered Person”

  3. Submit CNIC, mobile number (in your name), and email address

  4. Receive password via SMS and email

  5. Log in to the portal using your CNIC as login ID

If you are already registered and forgot your password, use the “Forgot Password” option.

Step 4: Prepare Your Income Tax Return

After logging in:

  1. Go to Declaration → File Return

  2. Select the Tax Year (e.g., 2025 for income earned during July 2024–June 2025)

  3. Click “Periodical → Income Tax Return”

  4. Fill in the following sections:

    • Personal Profile (update if anything has changed)

    • Employment Income (salary details and employer NTN)

    • Business Income (if applicable)

    • Property/Rental Income

    • Capital Gains & Other Sources

    • Tax Deductions & Credits

    • Tax Paid/Withheld (WHT on bank transactions, utilities, mobile, etc.)

Attach any supporting documents, if required.

Step 5: Submit the Return

Once all sections are completed:

  • Click “Calculate” to confirm your tax payable/refundable

  • Submit the form

  • If tax is payable, generate a PSID (Payment Slip ID)

  • Pay through ATM, mobile banking, or bank branch

After successful payment, go back to IRIS and link your paid PSID to the return.

Step 6: Submit Wealth Statement (Mandatory for Filers)

Every filer is required to file a Wealth Statement (Form 116), which includes:

  • Assets held (property, vehicles, bank balances, investments)

  • Liabilities (loans, credit cards, etc.)

  • Increase/decrease in wealth compared to last year

Submit the statement along with your income tax return.

Step 7: Confirmation & Record-Keeping

After submission:

  • Download or print your Acknowledgment Receipt

  • Save a PDF copy of your Income Tax Return and Wealth Statement

  • Keep digital records of all supporting documents for 6 years

Common Filing Deadlines

  • Individuals & AOPs: September 30

  • Companies (with June year-end): December 31

  • Deadlines may be extended by FBR notifications, so keep an eye on FBR’s website or subscribe to alerts

What If You Miss the Deadline?

  • You will be excluded from ATL

  • Higher withholding tax will apply to banking and transactions

  • You may face penalties or default surcharge

  • You can still file a return later, but with reduced benefits

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Cancellation of Income Tax Registration in Pakistan ( How do I cancel my FBR registration?

by FBRTax

If you have closed your business, dissolved your partnership, or ceased income-generating activities, it’s important to formally cancel your Income Tax Registration with the Federal Board of Revenue (FBR). Failing to do so can result in unnecessary tax notices, late filing penalties, and continued obligation to file tax returns—even when your business is no longer operational.

This article outlines the complete process for cancelling income tax registration in Pakistan, also known as FBR de-registration, including documents required, legal steps, and what to expect after submission.

Who Can Apply for De-Registration?

The following categories of taxpayers can apply for cancellation of income tax registration:

  • Individuals (freelancers, consultants, salaried persons) who no longer earn taxable income

  • Proprietorship businesses that have been shut down

  • Partnership firms (AOPs) that have been dissolved

  • Companies that are no longer operational or have been liquidated

  • Foreign companies closing operations in Pakistan

Common Reasons for De-Registration

  • Business closure or wind-up

  • Change in business structure (e.g., conversion from AOP to company)

  • Dissolution of partnership

  • Migration or change in tax jurisdiction

  • Permanent retirement from taxable activity

  • Duplicate NTN or registration error

Step-by-Step Guide to Cancel Income Tax Registration in Pakistan

Step 1: Prepare a Written Request for De-Registration

Start by writing a formal application addressed to the Commissioner Inland Revenue at your relevant Regional Tax Office (RTO). The letter should include:

  • Your Name, CNIC/NTN

  • Business Name (if applicable)

  • Reason for de-registration

  • Tax year till which returns have been filed

  • Declaration that there are no pending liabilities

You may also initiate this through your IRIS login if online de-registration functionality is enabled for your profile.

Step 2: Clear All Tax Liabilities

Before the FBR processes your de-registration request, you must:

  • Pay all outstanding tax dues

  • File any pending tax returns (income tax and sales tax)

  • Ensure there are no ongoing audits, assessments, or appeals

You can check your tax status by logging in to the FBR IRIS portal and reviewing your tax ledger.

Step 3: Submit Proof of Business Closure or Dissolution

Along with your request, attach supporting documents depending on your business type:

For Individuals

  • CNIC copy

  • Proof that you no longer earn taxable income (e.g., resignation letter, emigration documents, etc.)

  • Declaration of cessation of activity

For Sole Proprietorship

  • Business closure affidavit

  • Last utility bill showing business closed

  • Lease termination or property handover documents

  • Letter to bank for account closure (if available)

For AOPs (Partnership Firms)

  • Partnership dissolution deed

  • Resolution signed by all partners

  • CNICs of all partners

  • NTN certificate copy

For Companies

  • SECP winding-up resolution or dissolution certificate

  • Final audit reports

  • Letter from Registrar of Companies acknowledging closure

  • CNICs of directors and final Form-29

Step 4: Apply for No Objection Certificate (NOC) from FBR

Once you have cleared all dues and submitted supporting documents, request a No Objection Certificate (NOC) from FBR. This is issued after:

  • Verifying that no amount is payable

  • Confirming all returns have been filed

  • Ensuring no active audit or legal proceedings are pending

This NOC is crucial for final de-registration and can be obtained from the relevant FBR field office or through your authorized representative.

Step 5: Submit De-Registration Request with NOC

Attach the NOC with your de-registration application and submit it to the:

  • Relevant Inland Revenue office (RTO)

  • Facilitation counter of FBR

  • Or upload it via the IRIS portal, if applicable

Once the request is accepted, FBR will mark your NTN as “inactive” in their system.

Step 6: Await Confirmation from FBR

After review, FBR will issue a formal cancellation notification or mark your status as “de-registered” in the Active Taxpayer database.

You can verify this by:

  • Logging into IRIS

  • Searching your NTN using FBR’s Taxpayer Profile Inquiry tool

Keep a copy of your de-registration confirmation for future legal or financial use.

What Happens After De-Registration?

Once your income tax registration is cancelled:

  • You are no longer required to file tax returns

  • Your NTN will be marked as “inactive” in FBR records

  • You will be removed from the Active Taxpayers List (ATL)

  • No further tax notices or penalties will be issued unless there are historical discrepancies

However, you must reactivate your NTN if you resume business or taxable activity in the future.

Key Points to Remember

  • Sales tax registration (STRN) must be cancelled separately

  • You cannot cancel registration if any audit, appeal, or recovery is pending

  • Maintain a record of de-registration for at least 6 years

  • If SECP-registered, de-register with SECP and FBR in parallel

  • Ensure all withholding statements, sales tax returns, and financial statements are filed before exit

FBR-Office

Register for sale tax in Pakistan

by FBRTax

If you are involved in the sale of goods, provision of services, import, or manufacturing, you may be legally required to register for Sales Tax with the Federal Board of Revenue (FBR). Registration enables you to obtain a Sales Tax Registration Number (STRN), comply with tax regulations, and avail benefits such as input tax adjustments and refund claims.

This guide outlines the complete step-by-step process to register for Sales Tax in Pakistan, updated for 2025, along with the documents required and filing obligations after registration.

What is Sales Tax?

Sales tax in Pakistan is an indirect tax levied on the supply, manufacturing, import, or sale of goods and services. It is collected at different stages of the supply chain and is regulated under the Sales Tax Act, 1990.

  • The standard rate of sales tax is currently 18%, although certain goods and services may be taxed at different rates or exempted under special schedules.

Who Needs to Register for Sales Tax?

According to the Sales Tax Act, the following entities are required to register:

  • Manufacturers

  • Importers

  • Wholesalers and Distributors

  • Retailers (specific sectors)

  • Service Providers (e.g., restaurants, ride-hailing services, telecoms)

  • Online sellers (under FBR’s updated digital economy regulations)

If your business crosses the threshold of Rs. 10 million annual turnover or is involved in taxable supplies, registration becomes mandatory.

Step-by-Step Process to Register for Sales Tax in Pakistan

Step 1: Obtain a National Tax Number (NTN)

Before registering for Sales Tax, you must first register with FBR and obtain an NTN (National Tax Number). This can be done online via the IRIS portal or by visiting an FBR Tax Facilitation Center.

  • Visit: https://iris.fbr.gov.pk

  • Upload CNIC, business details, and bank certificate

  • Once approved, your NTN will be generated

Step 2: Apply for Sales Tax Registration (STRN)

Once you have your NTN, log into your IRIS account and apply for Sales Tax Registration. Here’s how:

  1. Log in to IRIS portal

  2. Go to Registration → Form 181

  3. Select “Sales Tax Registration”

  4. Fill out business details, nature of business, product/service categories

  5. Upload required documents

  6. Submit the form for FBR review and verification

Required Documents

You’ll need to upload the following documents (scanned in PDF):

  • Certificate of Incorporation (for companies) or CNIC (for individuals)

  • Business bank account maintenance certificate

  • Tenancy agreement or ownership document of business premises

  • Utility bill (not older than 3 months) for the business premises

  • Email address and mobile number (registered in your name)

  • SECP registration certificate (if applicable)

Step 3: Obtain STRN (Sales Tax Registration Number)

After verification of your documents and approval from FBR, you will be issued a Sales Tax Registration Number (STRN).

This number will be used for:

  • Filing sales tax returns

  • Charging sales tax on your invoices

  • Claiming input tax on purchases

  • Staying on the Active Sales Taxpayer List

Note: Your NTN and STRN are often the same number, but categorized differently in the FBR system.

Step 4: Receive National Sales Tax Number (NSTN) – If Applicable

Under Pakistan’s new Single Sales Tax Portal, introduced for simplified registration, FBR may issue a National Sales Tax Number (NSTN). This applies to certain sectors including:

  • Online platforms

  • Service providers

  • Freelancers exporting services
    NSTN aims to create unified registration across federal and provincial tax authorities (e.g., PRA, KPRA, SRB, BRA).

Check FBR or SRB guidelines to confirm NSTN applicability to your business.

Post-Registration: Sales Tax Compliance

Once registered, you are legally obligated to:

File Monthly Sales Tax Returns

  • Sales Tax Returns (Form STR-7) must be filed monthly, by the 18th of every month

  • Declare your total sales, purchases, and input/output tax

  • Pay tax due via online payment methods (ADC, mobile banking, internet banking)

Maintain Sales Tax Records

Under the Sales Tax Act, you must maintain:

  • Sales invoices with your STRN mentioned

  • Purchase receipts

  • Input tax records (for tax credit purposes)

  • Inventory registers

FBR may audit your records at any time.

Get Integrated with FBR POS System (if applicable)

If you’re a Tier-1 Retailer, you’re required to integrate your Point-of-Sale (POS) system with FBR’s real-time invoice reporting mechanism.

This is mandatory for:

  • Large retail chains

  • Malls, grocery chains

  • Brands with multiple outlets

  • Online sellers over a certain threshold

Penalties for Non-Compliance

Failure to register or file sales tax returns can lead to:

  • Heavy penalties and fines

  • Suspension of NTN or STRN

  • Delisting from FBR’s Active Taxpayer List (ST ATL)

  • Legal action or prosecution under the Sales Tax Act, 1990

Benefits of Sales Tax Registration

  • Access to formal business ecosystem

  • Input tax credit on purchases and imports

  • Required for corporate clients, tenders, and government contracts

  • Eligible for tax refunds and export benefits

  • Improved business credibility and compliance standing

  • Appearing on the Sales Tax Active Taxpayer List (ST ATL)

Conclusion

Sales Tax Registration is not just a legal requirement — it’s a gateway to building a formal, recognized, and scalable business in Pakistan. Whether you’re a startup, freelancer, retailer, or manufacturer, staying compliant with FBR’s sales tax regulations helps avoid penalties and unlocks growth opportunities.

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HOW TO REGISTRATION FOR TAX IN PAKISTAN ( FBR REGISTRATION PROCESS)

by FBRTax

If you live or do business in Pakistan, registering with the Federal Board of Revenue (FBR) is a legal requirement. Tax registration allows individuals and businesses to get a National Tax Number (NTN) or Taxpayer Identification Number (TIN), enabling them to file returns, claim refunds, appear on the Active Taxpayers List (ATL), and operate legally.

Whether you are an employee, freelancer, sole proprietor, partner in a firm, or running a company — this step-by-step guide explains how to register for tax in Pakistan through FBR in 2025.

Step 1: Obtain a National Tax Number (NTN)

The National Tax Number (NTN) is your identity as a taxpayer. It is issued by the FBR upon registration and is mandatory for:

  • Income tax filing

  • Opening a business or salary account

  • Property transactions

  • Import/export activities

  • Government tenders

How to Apply for NTN

There are two ways to apply for an NTN in Pakistan:

A. Online (for Individuals)

Use FBR’s IRIS portal:
🔗 https://iris.fbr.gov.pk/public/txplogin.xhtml

Create a new registration by providing:

  • CNIC

  • Registered mobile number

  • Email address

  • Scanned documents (bank certificate, tenancy proof, utility bill)

B. Physical (for Companies, AOPs, and Others)

Visit the nearest Regional Tax Office (RTO) or Tax Facilitation Center (TFC) with:

  • CNIC (or SECP incorporation certificate for companies)

  • Original business documents

  • Proof of business address

  • Bank certificate

  • Utility bill of business premises

FBR officials will process your application and issue an NTN.

Step 2: File a Tax Registration Application

After obtaining your NTN (or during the same process), you must file an official registration request with FBR. This can be done:

  • Online through IRIS (for individuals)

  • Physically at RTO or TFC (for companies and partnerships)

Required Details

The registration application requires information such as:

  • Nature of business

  • Principal activity

  • Business address

  • Business bank account

  • Ownership structure (for companies or partnerships)

FBR will verify the details and may visit your premises if needed.

Step 3: Submit Required Documents

Along with your registration form, you must attach relevant documents depending on your taxpayer type:

For Individuals

  • CNIC

  • Mobile SIM (registered in your name)

  • Personal email address

  • Bank certificate showing account in your name

  • Tenancy agreement or property ownership document (if doing business)

  • Latest utility bill (within last 3 months)

For AOPs (Partnerships)

  • Partnership deed

  • CNICs of all partners

  • Letter authorizing one partner to handle registration

  • Firm registration certificate (if applicable)

  • Business bank certificate

  • Utility bill and tenancy/ownership document

For Companies

  • SECP incorporation certificate

  • CNICs of directors

  • Board resolution/authorization letter

  • Company email

  • Bank certificate in company’s name

  • Tenancy or ownership proof

  • Recent utility bill

FBR requires that all submitted documents be in original form for verification during physical visits.

Step 4: Obtain Taxpayer Identification Number (TIN)

Once your application is approved, the FBR issues you a Taxpayer Identification Number (TIN) — this could be your NTN in case of an individual or company, or a separate TIN depending on business structure and tax category.

The TIN is used for:

  • Filing tax returns

  • Appearing on the ATL

  • Receiving FBR communications

  • Claiming tax refunds

  • Sales tax registration, if applicable

You can verify your TIN or NTN status anytime using FBR’s online taxpayer verification tool.

Step 5: File Annual Tax Returns

After registration, it is mandatory to file your annual tax return. A return includes:

  • Income details from salary, business, rent, capital gains, etc.

  • Deductible expenses

  • Tax withheld or paid

  • Declaration of assets, liabilities, and wealth

  • Tax computation and payment, if any

Filing Deadlines

  • Individuals & AOPs: By September 30 each year

  • Companies: By December 31 (or within 6 months of year-end)

Filing is done through the IRIS portal, and it is necessary to maintain ATL status, which brings several tax benefits.

Benefits of FBR Tax Registration

  • Appear on Active Taxpayer List (ATL)

  • Pay reduced withholding tax rates on banking, vehicles, and property

  • Become eligible for business tenders, loans, and government contracts

  • Claim input tax and refunds

  • Build financial credibility

  • Legally operate a registered business or freelance setup

Key Notes for 2025

  • Only individuals can register online. Companies and AOPs must visit the RTO or TFC

  • Mobile SIM and email must be in the name of the applicant

  • FBR may require in-person verification before issuing TIN

  • New e-payment methods including mobile wallets and ADC are accepted for tax payments

Final Words

The process to register for tax in Pakistan through FBR is now easier than ever, especially for individuals who can register online. With growing digitization, the FBR has streamlined its operations through the IRIS platform, mobile verification, and integrated services.