Summary Under the new rates, salary income up to Rs600,000 annually is exempt from income tax.
ISLAMABAD (Web Desk) – The Federal Board of Revenue (FBR) has issued a withholding income tax rate card for fiscal year 2026-27, outlining applicable tax rates on various sectors, payments and transactions.
The rate card has been updated in accordance with the Finance Act 2026, up to June 30, 2026, and covers withholding tax on imports, salaries, profits, payments to non-residents, goods, services, contracts, exports, rent, prizes, petroleum products, cash withdrawals, motor vehicles, electricity, telephone and internet services, and real estate transactions.
Under the new rates, salary income up to Rs600,000 annually is exempt from income tax. Income between Rs600,001 and Rs1.2 million is subject to a 1% tax on the amount exceeding Rs600,000.
For annual income between Rs1.2 million and Rs2.2 million, the applicable tax is Rs6,000 plus 11% of the amount exceeding Rs1.2 million. Income between Rs2.2 million and Rs3.2 million is taxed at Rs116,000 plus 20% of the amount exceeding Rs2.2 million.
For income between Rs3.2 million and Rs4.1 million, the rate is Rs316,000 plus 25% of the amount exceeding Rs3.2 million. Income between Rs4.1 million and Rs5.6 million is subject to Rs541,000 plus 29% of the amount exceeding Rs4.1 million.
Income between Rs5.6 million and Rs7 million is taxed at Rs976,000 plus 32% of the amount exceeding Rs5.6 million, while income above Rs7 million is subject to Rs1.424 million plus 35% of the amount exceeding Rs7 million.
The rate card also specifies separate withholding tax rates for imported goods under different parts of the Twelfth Schedule, with different rates for Active Taxpayers List (ATL) and non-ATL persons. Separate rates have also been provided for commercial importers, pharmaceutical products, electric vehicle CKD kits and mobile phones.
For profit paid on bank or financial institution accounts and deposits, the withholding tax rate has been set at 20% for ATL persons and 40% for non-ATL persons in applicable cases. Other categories of profit are subject to rates of 15% and 30%, respectively.
Different rates have also been prescribed for profits on Sukuk, while payments to non-residents carry rates ranging from 5% to 20%, depending on the applicable category.
For IT and IT-enabled services, withholding tax has been set at 4% for ATL persons and 8% for non-ATL persons, while separate rates apply to other services.
For payments against goods, services and contracts, various rates have been prescribed. Sales of rice, cottonseed and edible oil are subject to 1.5% for ATL persons and 3% for non-ATL persons. Different rates apply to toll manufacturing and other categories.
For e-commerce transactions, payments for digitally ordered goods and services made through digital or banking channels attract withholding tax of 1% for ATL and 2% for non-ATL persons. For cash-on-delivery transactions, the rates are 2% and 4%, respectively.
The withholding tax rate on exports has been set at 1.25%, while export proceeds from computer software, IT and IT-enabled services earned by persons registered with the Pakistan Software Export Board are subject to a 0.25% rate.
Income earned by digital content creators and social media influencers through social media platforms is subject to withholding tax at 5% for ATL persons and 10% for non-ATL persons.
The rate card also contains applicable rates for rent from immovable property, prizes and winnings, petroleum products and cash withdrawals.
For motor vehicles, rates vary according to engine capacity. Vehicles up to 850cc are subject to 0.5% for ATL and 1.5% for non-ATL persons, while vehicles above 3,000cc carry rates of 12% and 36%, respectively. Fixed amounts based on engine capacity have also been specified.
For commercial and industrial electricity consumers, bills up to Rs500 are subject to zero tax. Bills between Rs500 and Rs20,000 attract a 10% rate, while bills exceeding Rs20,000 carry Rs1,950 plus 12% of the amount exceeding Rs20,000 for commercial consumers, and Rs1,950 plus 5% for industrial consumers.
For non-ATL domestic consumers, monthly electricity bills below Rs25,000 are subject to zero tax, while bills of Rs25,000 or more attract a 7.5% rate.
Telephone and internet services are also subject to withholding tax. A 10% rate applies to the amount exceeding Rs1,000 on monthly telephone bills, while internet, mobile phone and prepaid internet or telephone cards are subject to a 15% rate on the bill or sale price.
On the transfer of immovable property, the rate card specifies 2.75% for ATL persons and 11.5% for non-ATL persons.
The document also includes withholding tax rates for sales to distributors, dealers and wholesalers, sales to retailers, property purchases, remittances abroad and issuance of bonus shares by companies, among other transactions.
The FBR said the rate card has been prepared for the convenience of taxpayers, withholding agents and other stakeholders.
However, it clarified that in case of any discrepancy or error, the amended Income Tax Ordinance, 2001 will prevail. The rate card itself cannot be treated as a legal document or relied upon in court or before any legal forum.
