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WHAT ARE THE TYPES OF TAXES IN PAKISTAN?

Domestic Taxes, comprising Income Tax, Sales Tax and Federal Excise Duty, constitute about 90% of the Revenue collected by FBR. These taxes are not only similar in essence, but also are interdependent in practice. These are a few taxes collected by the Government of Pakistan, some other taxes collected by the government are explained below:-

 

  • Income Tax: Income tax is imposed on individuals and businesses based on their income level. The tax rate varies depending on the income bracket and can range from 2.5% to 35%. Taxpayers are required to file their income tax returns annually.

 

  • Sales Tax: Sales tax is imposed on the sale of goods and services at a rate of 17%. It is collected by the seller and remitted to the government.

 

  • Federal Excise Duty: Federal Excise Duty is imposed on certain goods and services, such as cigarettes and motor vehicles, at a rate of 17%.

 

  • Customs Duty: Customs duty is imposed on imported goods at a rate of up to 50%. The rate varies depending on the type of goods and their country of origin.

 

  • Agricultural Income Tax: Agricultural income tax is imposed on the income generated from agricultural activities at a rate of 2.5%. It is applicable only to landowners with agricultural income above a certain threshold.

 

  • Withholding Tax: Withholding tax is imposed on certain types of income, such as Withholding of tax on dividend is based on ‘Active’ and ‘Non-Active’ status of members, whereby, rate of withholding tax is 15% and 30% respectively. It is collected by the payer and remitted to the government.

 

  • Property Tax: Property tax is imposed on property ownership at a rate that varies depending on the location and value of the property.

 

  • Capital Value Tax: Capital Value Tax is a one-time tax imposed on the value of a property at the time of purchase or transfer. The rate varies depending on the location and value of the property.

 

  • Token Tax: Token tax is imposed on vehicle registration at a rate that varies depending on the type of vehicle and its engine capacity.

 

  • Professional Tax: Professional tax is imposed on certain professionals, such as doctors and engineers, at a rate that varies depending on their income level. It is collected by the government and used to fund professional associations and development programs.