How to Calculate Your Tax Liability in Pakistan 2023
Introduction
Income tax is a tax levied on the income earned by individuals and businesses in Pakistan. The tax is administered by the Federal Board of Revenue (FBR). The tax rate varies depending on the type of income and the income level.
How to calculate your tax liability
To calculate your tax liability, you will need to know your taxable income. Your taxable income is your total income minus any allowable deductions. The following are some common allowable deductions:
- Zakat paid to approved institutions
- Medical allowance
- House rent allowance
- Professional tax
- Education allowance
- Life insurance premium
Once you have calculated your taxable income, you can use the following income tax slabs to calculate your tax liability:
| Income slab | Tax rate |
|---|---|
| Up to PKR 600,000 | 0% |
| PKR 600,000 to PKR 1.2 million | 2.5% |
| PKR 1.2 million to PKR 2.4 million | 12.5% |
| PKR 2.4 million and above | 27.5% |
Example
Let's say you are a salaried individual and your annual salary income is PKR 1.5 million. Your taxable income is calculated as follows:
Total income: PKR 1.5 million Less allowable deductions: PKR 0.2 million (medical allowance) Taxable income: PKR 1.3 million
Your tax liability is calculated as follows:
On the first PKR 600,000 of taxable income: 0% On the next PKR 600,000 of taxable income: 2.5% of PKR 600,000 = PKR 15,000 On the remaining PKR 100,000 of taxable income: 12.5% of PKR 100,000 = PKR 12,500
Total tax liability: PKR 27,500
Income tax calculator
There are a number of income tax calculators available online. These calculators can help you to calculate your tax liability quickly and easily.
Conclusion
It is important to note that the income tax laws in Pakistan are complex and are subject to change on a regular basis. It is therefore advisable to consult with a tax professional to get accurate advice on your tax liability.