Navigating the Pakistan Tax Card for FY 2024-2025: A Must-Know Guide for Taxpayers
As Pakistan moves into the fiscal year 2024–2025, it is imperative that individuals and businesses adhere to the most recent tax laws. The new Tax Card has brought about several important changes that will immediately impact how taxes are calculated and how taxes are withheld.
One important aspect of Pakistan’s tax system is the differentiation between filers, Late Filers and non-filers. In case you haven’t heard yet, the tax benefits and obligations are significantly influenced by your status. In this post, we’ll break down the updates for associations of persons (AOPs), salaried individuals, and non-salaried individuals, along with key aspects of the tax laws that you should be aware of.
Section 149: People on Salaries
Salaried people’s total taxable income determines their tax rates. When salary income exceeds 75% of total taxable income (under the regular tax regime), the following tax slabs apply:
| Taxable Income | Rate of Tax |
| Up to Rs. 600,000 | No tax |
| Rs. 600,001 to Rs. 1,200,000 | 5% of the amount exceeding Rs. 600,000 |
| Rs. 1,200,001 to Rs. 2,200,000 | Rs. 30,000 + 15% of the amount exceeding Rs. 1,200,000 |
| Rs. 2,200,001 to Rs. 3,200,000 | Rs. 180,000 + 25% of the amount exceeding Rs. 2,200,000 |
| Rs. 3,200,001 to Rs. 4,100,000 | Rs. 430,000 + 30% of the amount exceeding Rs. 3,200,000 |
| Above Rs. 4,100,000 | Rs. 700,000 + 35% of the amount exceeding Rs. 4,100,000 |
Non-Salaried Individuals & Associations of Persons (AOPs)
For non-salaried individuals and AOPs, the tax rates differ as follows:
| Taxable Income | Rate of Tax |
| Up to Rs. 600,000 | No tax |
| Rs. 600,001 to Rs. 1,200,000 | 15% of the amount exceeding Rs. 600,000 |
| Rs. 1,200,001 to Rs. 1,600,000 | Rs. 90,000 + 20% of the amount exceeding Rs. 1,200,000 |
| Rs. 1,600,001 to Rs. 3,200,000 | Rs. 170,000 + 30% of the amount exceeding Rs. 1,600,000 |
| Rs. 3,200,001 to Rs. 5,600,000 | Rs. 650,000 + 40% of the amount exceeding Rs. 3,200,000 |
| Above Rs. 5,600,000 | Rs. 1,610,000 + 45% of the amount exceeding Rs. 5,600,000 |
Additionally, AOPs that operate as professional firms regulated by law will face a maximum tax of 40% of their income. An extra 10% tax will be applied to the tax liability of individuals and AOPs making more than Rs. 10 million; if an employee is paid, the employer will deduct this sum.
Key Updates for 2024-2025:
Here are some notable changes and updates in the tax structure for the fiscal year 2024-2025:
1. Dividends (Section 150)
The tax rate on dividends differs for filers and non-filers. The filer rate is 7.5% for independent power producers (IPPs), and the non-filer rate is 15%. Filers will pay 15% for mutual funds and REITs, while non-filers will pay 30%.
- Profit on Debt (Section 151)
Interest income from debt will be taxed at 15% for filers, while non-filers will face a 30% to 35% rate. - Exports Sections 154 and 154A
Filers now pay a 1% tax under the updated export tax, while non-filers pay a 2% tax. IT services and IT-enabled services are subject to special regulations, and registered exporters are eligible for a 0.25 percent discount.
Section 155: Income from Rentals
A tiered tax system applies to rental income, with rates increasing according to income level and starting at 5% for income over Rs. 300,000. Businesses will have 15% deducted at the source.
5.Motor Vehicles (Section 231B)
When registering or transferring motor vehicles, there are different tax rates for filers and non-filers, based on the engine capacity. For instance, the tax rate for a vehicle with an engine capacity of up to 850cc is 0.5% for filers and 1.5% for non-filers.
- Cash Withdrawals (Section 231AB)
If you withdraw more than Rs. 50,000 per day, a 0.6% tax will be levied on non-filers. - Property Capital Gains Tax (Section 37)
Both filers and non-filers must pay 15% tax on properties sold within a year. However, the tax rate drops if the holding period is longer than two years. However, non-filers will be subject to the regular individual tax rates, which include a 15% minimum tax. - Section 4C: High-Earner Super Tax
A Super Tax has been put in place for individuals and businesses that earn a lot of money. For example, individuals whose income surpasses Rs. 500 million will be subject to a 10% tax.
9. Section 7F: Builders and Developers’ Tax
10% of gross receipts will be taxed by builders and developers who construct and sell real estate; the rate will increase based on the kind of property or development.
Additional Significant Updates for 2024–2025:
• Late Filer Concept: People who don’t file their taxes on time will be penalized with higher tax rates under the recently introduced late filer concept. You won’t be regarded as a late filer, though, if you have filed your returns on time for the previous three years.
- Tax on Remittance Abroad (Section 236Y): Any money sent abroad through credit, debit, or prepaid cards will be subject to 5% tax for filers and 10% for non-filers.
Finally, to stay ahead, employ smart tax planning.
The tax reforms of 2024–2025 offer opportunities for tax planning and savings, but they also bring with them new challenges. Regardless of whether you are a salaried individual or a business owner, it is imperative that you comprehend the updated tax card in order to minimize your tax obligations and maintain compliance.
Filing taxes has several benefits, including exemptions from higher taxes and reduced tax rates on various forms of income. If you haven’t already, it’s time to consider the financial advantages of registering and filing your taxes on time.
Don’t let the complexity of the tax system overwhelm you. With the right knowledge, you can successfully navigate the tax system and benefit from these changes for a more stable financial future.