In This Article
Income tax returns for Tax Year 2025-26 must be filed by September 30, 2026. Missing this deadline removes you from the Active Taxpayer List (ATL), resulting in significantly higher withholding tax rates on all your transactions — banking, property, vehicles, and more.
What Changed in Finance Act 2025
The Finance Act 2025, enacted in July 2025, introduced meaningful relief for salaried taxpayers in Tax Year 2025-26. While the nil-tax threshold remained at Rs. 600,000, rates in the lower and middle brackets were cut significantly — the Rs. 600k–1.2M bracket dropped from 5% to just 1%, and the Rs. 1.2M–2.2M bracket fell from 15% to 11%. A new high-income surcharge structure was also adjusted for salaried persons.
All tax rates on this page are verified against the FBR Salient Features Budget 2025-26, FileKero's registered tax practitioner guide (last reviewed April 2026), and PwC Pakistan Tax Summaries. Always cross-check at fbr.gov.pk for the most current version or consult a qualified tax professional.
The most significant change for salaried employees is the widening of the 15% bracket, which now covers a larger income range before taxpayers move into the 25% band. For business owners and the self-employed, the non-salaried slabs saw a restructuring of the upper brackets.
Pakistan's tax law maintains two separate slab structures: one for salaried persons (whose salary income is more than 75% of total income) and one for non-salaried individuals (business owners, freelancers, AOPs). Make sure you use the right table for your situation.
Salaried Persons — Tax Slabs 2025-26
The following rates apply to salaried individuals for Tax Year 2025-26 (July 1, 2025 – June 30, 2026):
| Annual Taxable Income (PKR) | Fixed Tax | Rate on Excess | Effective Rate* |
|---|---|---|---|
| Up to Rs. 600,000 | — | 0% | 0% |
| Rs. 600,001 – 1,200,000 | — | 1% | 0 – 0.5% |
| Rs. 1,200,001 – 2,200,000 | Rs. 6,000 | 11% | 0.5 – 6.1% |
| Rs. 2,200,001 – 3,200,000 | Rs. 116,000 | 23% | 6.1 – 11.1% |
| Rs. 3,200,001 – 4,100,000 | Rs. 346,000 | 30% | 11.1 – 15.5% |
| Over Rs. 4,100,000 | Rs. 616,000 | 35% | 15.5%+ |
*Effective rate = total tax ÷ total income. Rises gradually as income increases.
Business Income — Tax Slabs 2025-26
These rates apply to business individuals, sole proprietors, AOPs (Association of Persons), and freelancers whose salary income is less than 75% of total income:
| Annual Taxable Income (PKR) | Fixed Tax | Rate on Excess |
|---|---|---|
| Up to Rs. 600,000 | — | 0% |
| Rs. 600,001 – 1,200,000 | — | 15% |
| Rs. 1,200,001 – 1,600,000 | Rs. 90,000 | 20% |
| Rs. 1,600,001 – 3,200,000 | Rs. 170,000 | 30% |
| Rs. 3,200,001 – 5,600,000 | Rs. 650,000 | 40% |
| Over Rs. 5,600,000 | Rs. 1,610,000 | 45% |
Source: Finance Act 2025, verified via FBR official documentation. Non-salaried rates are significantly higher — a business individual earning Rs. 1.2M pays 15× more tax than a salaried person at the same income.
Unlike salaried persons (whose surcharge was reduced to 9%), non-salaried individuals and AOPs with income exceeding Rs. 10 million continue to pay a 10% surcharge on their computed income tax. Source: PwC Pakistan Tax Summaries 2025-26.
High-Income Surcharge (Rs. 10M+)
Introduced in Finance Act 2025 under Section 4B, a surcharge applies to high-income taxpayers:
- Applies when taxable income exceeds Rs. 10,000,000
- For salaried persons: surcharge = 9% of the income tax computed under normal slabs (reduced from 10% in TY 2024-25)
- For non-salaried individuals & AOPs: surcharge remains 10% of the income tax
- Computed after all tax credits and rebates
- Source: Finance Act 2025, FBR Salient Features Budget 2025-26
Worked Examples
Example 1 — Salaried Employee: Rs. 2,400,000 Annual Income
| Income Range | Amount in Slab | Rate | Tax |
|---|---|---|---|
| Rs. 0 – 600,000 | Rs. 600,000 | 0% | Rs. 0 |
| Rs. 600,001 – 1,200,000 | Rs. 600,000 | 1% | Rs. 6,000 |
| Rs. 1,200,001 – 2,200,000 | Rs. 1,000,000 | 11% | Rs. 110,000 |
| Rs. 2,200,001 – 2,400,000 | Rs. 200,000 | 23% | Rs. 46,000 |
| Total Tax Payable | Rs. 2,400,000 | — | Rs. 162,000 |
| Effective Tax Rate | 6.75% | ||
Skip the manual calculation. Our free Income Tax Calculator computes your exact liability in seconds — including slab breakdown, effective rate, and monthly deduction amount. Open Calculator →
ATL Status & Why It Matters
The Active Taxpayer List (ATL) is FBR's database of persons who have filed their income tax returns on time. Being on the ATL means you pay lower withholding tax rates across all transactions.
If you miss the September 30 filing deadline, FBR removes you from the ATL. The consequences are immediate and financial:
| Transaction Type | Filer Rate | Non-Filer Rate | Difference |
|---|---|---|---|
| Bank cash withdrawal (>Rs. 50,000/day) | 0% | 0.6% | +0.6% |
| Property purchase | 3% | 6% | +3% |
| Vehicle registration (above 1600cc) | 3% | 6% | +3% |
| Dividend income | 15% | 30% | +15% |
| Foreign remittance (business) | 1% | 2% | +1% |
| Prize bond winnings | 15% | 25% | +10% |
How to File Before September 30
Filing your income tax return in Pakistan is done through FBR's online portal, IRIS 2.0. Here is the process at a high level:
- Log in to iris.fbr.gov.pk using your NTN and IRIS password
- Navigate to Declaration → Income Tax Return → Tax Year 2025-26
- Complete all relevant sections: salary certificate / business accounts, property income, foreign income, bank profit, dividends
- Reconcile your wealth statement — assets and liabilities must match your declared income
- Submit and keep the acknowledgement slip (CPR) for your records
If you have multiple income sources, property, or foreign income, filing can be complex. Ifat Associates offers professional return filing services for individuals and businesses across Pakistan — contact us before September 15 to avoid the deadline rush.