Latest Tax Brackets for Pakistan 2023. As a citizen of Pakistan, one of the most important things you should know is your tax bracket that is in line with your income. In Pakistan, there are seven tax brackets for most ordinary income for the 2022 tax year: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.
In Pakistan, your tax bracket depends on your taxable income and your filing status: single, married filing jointly or qualifying widow(er), married filing separately and head of household. Usually, as you move up the pay scale, you also move up the tax scale. That’s to say that your tax bracket increases as your income also increases
In this article, you will get to know what a Tax Brackets really means, the latest tax bracket in Pakistan for the year 2022, how the tax bracket works in Pakistan, how to calculate your tax bracket as a salary earner in Pakistan, and lots more.
What are Tax Brackets?
A tax bracket is defined as the range of incomes subject to a certain income tax rate. Tax brackets result in a progressive tax system, in which taxation progressively increases as an individual’s income grows. Low incomes fall into tax brackets with relatively low-income tax rates, while higher earnings fall into brackets with higher rates.
How the Tax bracket works in Pakistan
Do you want to know if you are paying the right tax? It is important that you know how the tax bracket works in Pakistan. Pakistan levies a tax on its residents on their worldwide income. A non-resident individual is taxed only on Pakistan-source income, including income received or deemed to be received in Pakistan or deemed to accrue or arise in Pakistan.
Taxable Income and Income Tax Rate in Pakistan
The following are the tax bracket in Pakistan:
| Taxable Income | Income Tax Rate in Pakistan |
| where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000 | 5% of the amount exceeding Rs. 600,000 |
| where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,800,000 | Rs. 30,000 plus 10% of the amount exceeding Rs. 1,200,000 |
| where taxable income exceeds Rs. 1,800,000 but does not exceed Rs. 2,500,000 | Rs. 90,000 plus 15% of the amount exceeding Rs. 1,800,000 |
| where taxable income exceeds Rs. 2,500,000 but does not exceed Rs. 3,500,000 | Rs. 195,000 plus 17.5% of the amount exceeding Rs. 2,500,000 |
| where taxable income exceeds Rs. 3,500,000 but does not exceed Rs. 5,000,000 | Rs. 370,000 plus 20% of the amount exceeding Rs. 3,500,000 |
| where taxable income exceeds Rs. 5,000,000 but does not exceed Rs. 8,000,000 | Rs. 670,000 plus 22.5% of the amount exceeding Rs. 5,000,000 |
| where taxable income exceeds Rs. 8,000,000 but does not exceed Rs. 12,000,000 | Rs. 1,345,000 plus 25% of the amount exceeding Rs. 8,200,000 |
| where taxable income exceeds Rs. 12,000,000 but does not exceed Rs. 30,000,000 | Rs. 2,345,000 plus 27.5% of the amount exceeding Rs. 12,000,000 |
| where taxable income exceeds Rs. 30,000,000 but does not exceed Rs. 50,000,000 | Rs. 7,295,000 plus 30% of the amount exceeding Rs. 30,000,000 |
| where taxable income exceeds Rs. 50,000,000 but does not exceed Rs. 75,000,000 | Rs. 13,295,000 plus 32.5% of the amount exceeding Rs. 50,000,000 |
| where taxable income exceeds Rs. 75,000,000 | Rs. 21,420,000 plus 35% of the amount exceeding Rs. 75,000,000 |
Salary Income is subject to the following divisions as per the general practices and according to the Income Tax Ordinance, 2001.
- House Rent Allowance (HRA)
- Basic salary
- Conveyance Allowance
- Medical and other Allowance
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