Global Property Guide

Financial Information for Residential Property Buyers


Living There

November 07, 2017

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. Married couples are taxed separately, joint taxation is not allowed in Pakistan.

The tax year is the 12-month period ending on 30 June and is denoted by the calendar year in which it ends. The tax year 2018 is from 01 July 2017 up to 30 June 2018. The tax year 2017 is from 01 July 2017 up to 30 June 2018.

INCOME TAX

There are five categories of income: (1) employment income, (2) income from profession and business, (3) income from property, (4) capital gains, and (5) income from other sources.

Income tax is levied at progressive rates. Different income tax rates apply on employment income and on other income.

INCOME TAX 2017 ON EMPLOYMENT INCOME

TAXABLE INCOME, PKR (US$)
TAX RATE
Up to 400,000 (US$3,810)
0%
400,000 - 750,000 (US$7,143)
5%
750,000 - 1,400,000 (US$13,333)
10%
1,400,000 - 1,500,000 (US$14,286)
12.50%
1,500,000 - 1,800,000 (US$17,143)
15%
1,800,000 - 2,500,000 (US$23,810)
17.50%
2,500,000 - 3,000,000 (US$28,571)
20%
3,000,000 - 3,500,000 (US$33,333)
22.50%
3,500,000 - 4,000,000 (US$38,095)
25%
4,000,000 - 7,000,000 (US$66,667)
27.50%
Over 7,000,000 (US$66,667)
30%

INCOME TAX 2017 ON OTHER INCOME

TAXABLE INCOME, PKR(US$)
TAX RATE
Up to 400,000 (US$3,810)
0%
400,000 - 750,000 (US$7,143)
10%
750,000 - 1,500,000 (US$14,286)
15%
1,500,000 - 2,500,000 (US$23,810)
20%
2,500,000 - 4,000,000 (US$38,095)
25%
4,000,000 - 6,000,000 (US$57,143)
30%
Over 6,000,000 (US$57,143)
35%
Source: Global Property Guide

RENTAL INCOME
Income from property, including rental income, is taxed at progressive rates. The tax base is the gross rent.

INCOME TAX 2017 ON OTHER INCOME

TAXABLE INCOME, PKR(US$)
TAX RATE
Up to 400,000 (US$3,810)
0%
400,000 - 750,000 (US$7,143)
10%
750,000 - 1,500,000 (US$14,286)
15%
1,500,000 - 2,500,000 (US$23,810)
20%
2,500,000 - 4,000,000 (US$38,095)
25%
4,000,000 - 6,000,000 (US$57,143)
30%
Over 6,000,000 (US$57,143)
35%
Source: Global Property Guide

CAPITAL GAINS
Capital gains realized by individuals from selling real property are not taxed in Pakistan unless sales of real property are part of the individual's business.

Capital gains in connection with a taxpayer's business activities are considered as business income and taxed accordingly.


PROPERTY TAX


Property Tax

Property tax is a provincial tax levied on the value of property. It is generally levied at a flat rate of 10% but the tax rates vary, depending on the province.

Property tax is levied at progressive rates in the Punjab province.

In the province of Sindh, property tax is levied at a flat rate of 20% on the annual rental value of the land and building.

Capital Value Tax

Individuals who purchase real property in urban areas or acquire the right to use the real property for more than 20 years are liable to pay capital value tax. The tax is levied at 4% on the property's recorded value. If no property value is recorded, the tax is levied at PKR50 (US$0.50) per square yard of the property.

CORPORATE TAXATION

INCOME TAX

Income and capital gains earned by companies are subject to corporate income tax at a flat rate of 32% for 2016. Income-generating expenses are deductible when calculating taxable income.

Corporate income tax rate will be reduced to 31% for 2017. The corporate income tax rate for 2018 and onwards is a flat rate of 30%.

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