New Tax Rates for Business Individuals and AOPs Effective from July 01, 2023

Islamabad, June 26, 2023 – The National Assembly of Pakistan has approved new tax rates for business individuals and the Association of Persons (AOPs) as part of the budget for the fiscal year 2023-24.

These rates as approved by Finance Bill 2023 will come into effect from July 01, 2023, and will be applicable for the tax year 2024.

The updated tax rates for business individuals and AOPs are as follows:

1. Taxable income up to Rs600,000: The tax rate shall be zero percent.
2. Taxable income exceeding Rs600,000 but not exceeding Rs800,000: A tax rate of 7.5 percent of the amount exceeding Rs600,000 shall apply.
3. Taxable income exceeding Rs800,000 but not exceeding Rs1,200,000: A fixed tax of Rs15,000, along with 15 percent of the amount exceeding Rs800,000, shall apply.
4. Taxable income exceeding Rs1,200,000 but not exceeding Rs2,400,000: A fixed amount of Rs75,000, along with 20 percent of the amount exceeding Rs1,200,000, shall apply.
5. Taxable income exceeding Rs2,400,000 but not exceeding Rs3,000,000: A fixed tax amount of Rs315,000, along with 25 percent of the amount exceeding Rs2,400,000, shall apply.
6. Taxable income exceeding Rs3,000,000 but not exceeding Rs4,000,000: A fixed tax of Rs465,000, along with 30 percent of the amount exceeding Rs3,000,000, shall apply.
7. Taxable income exceeding Rs4,000,000: A fixed tax of Rs765,000, along with 35 percent of the amount exceeding Rs4,000,000, shall apply.

To provide clarity, the following tax card for business individuals and AOPs is applicable for the tax year 2023:

1. Where the taxable income does not exceed Rs.600,000/-: 0 percent
2. Where the taxable income exceeds Rs. 600,000 but does not exceed Rs. 800,000: 5 percent of the amount exceeding Rs. 600,000
3. Where the taxable income exceeds Rs. 800,000 but does not exceed Rs. 1,200,000: Rs. 10,000 + 12.5 percent of the amount exceeding Rs.800,000
4. Where taxable income exceeds Rs.1,200,000 but does not exceed Rs. 2,400,000: Rs.60,000 + 17.5 percent of the amount exceeding Rs.1,200,000
5. Where taxable income exceeds Rs.2,400,000 but does not exceed Rs. 3,000,000: Rs. 270,000 + 22.5 percent of the amount exceeding Rs.2,400,000
6. Where taxable income exceeds Rs.3,000,000 but does not exceed Rs. 4,000,000: Rs.405,000 + 27.5 percent of the amount exceeding Rs.3,000,000
7. Where taxable income exceeds Rs.4,000,000 but does not exceed Rs. 6,000,000: Rs. 680,000 + 32.5 percent of the amount exceeding Rs.4,000,000
8. Where the taxable income exceeds Rs.6,000,000: Rs. 1,330,000 + 35 percent of the amount exceeding Rs.6,000,000.

You can learn more about Income Tax Return Filing method by enrolling in our Business income tax return master course.

Also Read:

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