Pakistan Income Tax Guide 2020: Understanding the FBR Slabs and Rates 2020
Tax Year 2020 (July 1, 2019, to June 30, 2020) brought crucial updates to Pakistan's income tax structure under the Federal Board of Revenue (FBR). Staying informed about the latest income tax slabs, corporate rates, and withholding provisions is essential for all individuals, associations of persons (AOPs), and companies.
Here is a breakdown of the key income tax rates and provisions for Tax Year 2020, as mandated by the FBR:
🧑💼 Income Tax Slabs for Individuals
The FBR maintains separate tax rate structures for salaried individuals and non-salaried individuals/AOPs.
1. Salaried Individuals
A "Salaried Individual" is typically defined as a person whose income under the head "Salary" exceeds 75% of their total taxable income.
| Taxable Income (Rupees) | Rate of Tax (Tax Year 2020) |
| Up to 600,000 | 0% |
| 600,001 to 1,200,000 | 5% of the amount exceeding Rs 600,000 |
| 1,200,001 to 1,800,000 | Rs 30,000 + 10% of the amount exceeding Rs 1,200,000 |
| 1,800,001 to 2,500,000 | Rs 90,000 + 15% of the amount exceeding Rs 1,800,000 |
| 2,500,001 to 3,500,000 | Rs 195,000 + 17.5% of the amount exceeding Rs 2,500,000 |
| 3,500,001 to 5,000,000 | Rs 370,000 + 20% of the amount exceeding Rs 3,500,000 |
| 5,000,001 to 8,000,000 | Rs 670,000 + 22.5% of the amount exceeding Rs 5,000,000 |
| 8,000,001 to 12,000,000 | Rs 1,345,000 + 25% of the amount exceeding Rs 8,000,000 |
| 12,000,001 to 30,000,000 | Rs 2,345,000 + 27.5% of the amount exceeding Rs 12,000,000 |
| 30,000,001 to 50,000,000 | Rs 7,295,000 + 30% of the amount exceeding Rs 30,000,000 |
| 50,000,001 to 75,000,000 | Rs 13,295,000 + 32.5% of the amount exceeding Rs 50,000,000 |
| Exceeding 75,000,000 | Rs 21,420,000 + 35% of the amount exceeding Rs 75,000,000 |
2. Non-Salaried Individuals and AOPs (Business Income)
These rates apply to individuals whose business income is substantial or for Associations of Persons (AOPs).
| Taxable Income (Rupees) | Rate of Tax (Tax Year 2020) |
| Up to 400,000 | 0% |
| 400,001 to 600,000 | 5% of the amount exceeding Rs 400,000 |
| 600,001 to 1,200,000 | Rs 10,000 + 10% of the amount exceeding Rs 600,000 |
| 1,200,001 to 2,400,000 | Rs 70,000 + 15% of the amount exceeding Rs 1,200,000 |
| 2,400,001 to 3,000,000 | Rs 250,000 + 20% of the amount exceeding Rs 2,400,000 |
| 3,000,001 to 4,000,000 | Rs 370,000 + 25% of the amount exceeding Rs 3,000,000 |
| 4,000,001 to 6,000,000 | Rs 620,000 + 30% of the amount exceeding Rs 4,000,000 |
| Exceeding 6,000,000 | Rs 1,220,000 + 35% of the amount exceeding Rs 6,000,000 |
🏦 Corporate and Small Company Tax Rates (TY 2020)
For Tax Year 2020, the standard corporate income tax rate remained consistent, with a concessionary rate for small companies:
Public & Private Company: The standard rate was 29%.
Small Company: The tax rate for a 'small company' was reduced to 23% for Tax Year 2020.
Banking Company: The tax rate was 39%.
Super Tax: For Tax Year 2020, super tax was levied at 4% for banking companies and 0% for other persons with income exceeding Rs 500 million.
💰 Key Withholding Tax (WHT) Rates and Provisions
Withholding tax rates are critical for compliance, as they are taxes deducted at the source of payment.
| Nature of Payment | Section | Filer Rate (approx.) | Non-Filer Rate (approx.) |
| Dividend | 150 | 15% (Mutual funds & most cases); up to 25% (where no tax is payable by the company) | 15% to 25% |
| Profit on Debt (Individual/AOP, exceeding Rs 500,000) | 151 | 15% | 15% |
| Sale of Goods (Company) | 153(1)(a) | 4.0% | 8.0% (100% increase for non-filers) |
| Sale of Goods (Other than Company) | 153(1)(a) | 4.5% | 9.0% (100% increase for non-filers) |
| Execution of Contracts (Other than Company) | 153(1)(c) | 7.0% | 14.0% (100% increase for non-filers) |
| Advance tax on Education expenses remitted abroad | 236R | 5% | 10% (100% increase for non-filers) |
| Advance Tax on Cash Withdrawal (Non-Filers) | 231A | N/A | 0.80% |
Crucial Note for Non-Filers: In many WHT sections, the applicable tax rate for a person not appearing on the Active Taxpayers' List (ATL) is increased by 100%. This highlights the financial incentive to become a tax filer.
🏡 Tax on Income from Property (Rent)
The rental income for Individuals and AOPs is subject to tax under a specific progressive slab structure:
| Gross Rental Income (Rupees) | Tax Rate/Amount |
| Up to 200,000 | Nil |
| 200,001 to 600,000 | 5.0% of the gross amount exceeding Rs 200,000 |
| 600,001 to 1,000,000 | Rs 20,000 + 10.0% of the gross amount exceeding Rs 600,000 |
| 1,000,001 to 2,000,000 | Rs 60,000 + 15.0% of the gross amount exceeding Rs 1,000,000 |
| Exceeding 2,000,000 | Rs 210,000 + 20.0% of the gross amount exceeding Rs 2,000,000 |
🟨 4. FBR Withholding Tax Rates (Highlights)
Salary (149) → As per salaried slab above
Supplies (153)
| Supplier Type | Filer | Non-Filer |
|---|---|---|
| Companies | 4% | 8% |
| Individuals/AOPs | 4.5% | 9% |
Services (153)
| Service Provider | Filer | Non-Filer |
|---|---|---|
| Companies | 8% | 14% |
| Individuals/AOPs | 10% | 17.5% |
Contracts (153)
| Type | Filer | Non-Filer |
|---|---|---|
| Companies | 7% | 14% |
| Others | 7.5% | 15% |
🟧 5. Property Tax Withholding (236C & 236K)
| Transaction | Filer | Non-Filer |
|---|---|---|
| Sale of property (236C) | 1% | 2% |
| Purchase of property (236K) | 1% | 2% |
🟪 6. Capital Gain on Sale of Immovable Property (CGT)
| Holding Period | CGT Rate |
|---|---|
| Up to 1 year | 10% |
| 1–2 years | 7.5% |
| 2–3 years | 5% |
| Above 3 years | 0% |
Disclaimer: Tax laws and rates are subject to continuous change and specific interpretation. Always consult the official notification or a qualified tax professional for personalized advice.
