Small Business & AOP Tax Filing Guide (TY 2025-26)
Small business filing in Pakistan sits between individual and full corporate. Sole proprietors and AOPs are taxed as individuals on the non-salaried slab; small companies get the 20% flat rate under Section 2(59A). The Section 100D minimum tax (1.25% of turnover regardless of profit) is the trap most businesses fall into.
Key rules for small business / aops
1.25% of turnover is the floor for individuals and AOPs. Even at a loss, this is due. Higher of regular slab tax or 1.25% of turnover. Excess minimum tax carries forward to be adjusted in later profitable years.
Rent, salaries, utilities, marketing, professional fees, depreciation - all deductible against business receipts. Keep every invoice, receipt, and bank statement. Cash expenses are challenged more often than banked expenses.
The AOP pays tax as a single unit on the non-salaried slab. Partners cannot separately tax their share of AOP profit - that share is exempt in partner hands to prevent double taxation.
Your filing timeline
- T-30 daysClose your books for the tax year
Reconcile bank + cash + credit card statements. Prepare P&L and balance sheet. Match sales against WHT deducted by clients (Section 153).
- T-14 daysGather Section 153 WHT certificates
Every corporate client who paid you should have deducted Section 153 WHT (typically 10%) and issued a certificate. Chase these before the deadline.
- T-7 daysDraft business return
Business Tax Calculator + Filing Wizard handle sole proprietor / AOP / small company differently. Pick the right entity type at setup.
- T-3 daysSubmit on IRIS
Business income tab. Attach WHT certificates as evidence for adjustable credit claim.
Tools you'll use
Related reading
Frequently asked
- What is Section 100D minimum tax?
- 1.25% of turnover for individuals and AOPs, applied when regular slab tax on profit computes to less. Ensures loss-making or thin-margin businesses still pay something. The excess (minimum tax over regular tax) can carry forward and be adjusted in later profitable years.
- Are AOP profits taxed twice - at AOP and partner level?
- No - Section 92 exempts a partner's share of AOP profit in the partner's hands, because it was already taxed at AOP level. The AOP pays once at entity level on non-salaried slabs. Partners just report their share for wealth statement purposes.
- What qualifies as a small company under Section 2(59A)?
- Paid-up capital + reserves not exceeding PKR 50M, annual turnover not above PKR 250M, and employee count under 250. Meets all three = 20% flat rate under Section 18. Fails any = 29% general corporate rate. Definition tightens periodically via Finance Acts.
- Do I need to charge sales tax on services?
- Depends on province and service type. Sales tax on services is provincial (PRA in Punjab, SRB in Sindh, KPRA in KP, BRA in Balochistan, ICT-ST in Islamabad). Standard rate 15-16%. Many professional services are exempt or reduced-rated. Register with the relevant provincial authority if your services fall under their schedule.
Ready to file?
The Easy Tax wizard has a dedicated path for small business / aops. 20-30 minutes to a complete IRIS-coded draft.
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