Estimate annual tax for businesses, AOPs, and companies registered in Pakistan. Handles slab-based and flat-rate regimes plus the Section 4C super tax.
Pakistan taxes business income under three different regimes depending on the legal form of the entity. Sole proprietors and Associations of Persons (AOPs) follow the non-salaried slab table - progressive from 15% to 45%. Companies pay flat rates set in Division II of the First Schedule: 20% for a Small Company under Section 2(59A), 29% for a general company, and 39% for a banking company. On top of either regime, Section 4C super tax can stack progressive 1% to 10% surcharges once taxable income crosses PKR 150 million. This calculator routes your numbers through whichever path matches the entity you pick.
The right starting point is always net income, not revenue. Pakistan's Income Tax Ordinance allows deduction of all expenses incurred wholly and exclusively for the business (Sections 20-35) - cost of goods, salaries, rent, utilities, depreciation under the Third Schedule, finance costs, and so on. Penalties, personal expenses, and any payment from which tax was deductible at source but wasn't deducted are disallowed. The "Deductible expenses" field expects the figure after those adjustments.
Section 2(59A) defines a Small Company by four cumulative tests, all of which must be met to qualify for the 20% rate: paid-up capital plus undistributed reserves up to PKR 50 million, turnover up to PKR 250 million in the tax year, workforce up to 250 employees, and the company must not be formed by the splitting up or reconstitution of an existing business. Lose any one test and the rate jumps to 29% for the year. Many founders register a private limited company specifically to access this rate, but skip the eligibility check the following year as their turnover grows.
Revenue PKR 60M, deductible expenses PKR 45M (cost of goods, payroll, rent, depreciation), tax credits PKR 200,000 (Section 61 donation).
Net income = PKR 15M. Taxable income after credits = PKR 14.8M. Tax at 20% flat = PKR 2,960,000. No super tax (under PKR 150M). Effective rate vs revenue ≈ 4.93%. If the same company lost its Section 2(59A) status, tax would jump to PKR 4,292,000 - a PKR 1.33M penalty.
Section 4C super tax is a separate charge that sits on top of the regular regime. The slabs are: 1% on income PKR 150M-200M, 2% on PKR 200M-250M, 3% on PKR 250M-300M, 4% on PKR 300M-350M, 6% on PKR 350M-400M, 8% on PKR 400M-500M, and 10% on anything above PKR 500M. For most banking and exploration sectors super tax now applies from much lower thresholds - if you operate in those sectors, override the default and consult Section 4C directly for the applicable schedule.
For individuals and AOPs in TY 2025-26, the calculator also applies the 10% surcharge on the base slab tax once taxable income exceeds PKR 10 million. Companies are not subject to this individual surcharge, but they can still owe super tax. The two surcharges are independent and can both apply to the same entity if it's structured as an AOP.
Mixing personal and business expenses. A proprietor's household utility bill, family vehicle running cost, or personal phone postpaid plan is not a business deduction. FBR audits routinely disallow these and add back the amount with penalty.
Skipping the depreciation schedule. Plant, machinery, and intangibles depreciate at rates set in the Third Schedule (10% / 15% / 25% initial + reducing-balance). Many small businesses expense the full cost in year one - the return is technically wrong even if the cash effect over time is similar.
Forgetting advance tax credit. Withholding tax already deducted on imports, utilities, contractor payments, and banking transactions is creditable against your final liability. Add it to the "Tax credits / adjustments" field or it will look like you owe more than you do.
Misclassifying AOP vs partnership firm income. AOP-level tax is paid by the AOP itself; the partners' share is then exempt in their hands (Section 92). Filing the share again at individual level is double taxation.