FBR Issues Withholding Income Tax Rate Card for FY2026-27

ISLAMABAD: The Federal Board of Revenue (FBR) has issued the withholding income tax rate card for the fiscal year 2026-27, outlining applicable tax rates on various sectors, payments and financial transactions.

The rate card has been updated in accordance with the Finance Act 2026 as of June 30, 2026. It covers withholding tax rates on imports, salaries, profits, payments to non-residents, goods, services and contracts, exports, rent, prizes, petroleum products, cash withdrawals, motor vehicles, electricity, telephone and internet services, and the purchase and sale of immovable property.

Salary Tax Rates

According to the rate card, salaried individuals with taxable annual income up to Rs600,000 will pay no income tax.

Income between Rs600,001 and Rs1.2 million will be taxed at 1 percent on the amount exceeding Rs600,000.

For annual income between Rs1.2 million and Rs2.2 million, the tax is Rs6,000 plus 11 percent of the amount exceeding Rs1.2 million.

Income between Rs2.2 million and Rs3.2 million will attract Rs116,000 plus 20 percent of the amount exceeding Rs2.2 million.

For income between Rs3.2 million and Rs4.1 million, the rate is Rs316,000 plus 25 percent of the amount exceeding Rs3.2 million.

Income between Rs4.1 million and Rs5.6 million will be taxed at Rs541,000 plus 29 percent of the amount exceeding Rs4.1 million.

For income between Rs5.6 million and Rs7 million, the tax is Rs976,000 plus 32 percent of the amount exceeding Rs5.6 million.

Annual income above Rs7 million will be taxed at Rs1.424 million plus 35 percent of the amount exceeding Rs7 million.

Tax on Imports and Profits

The rate card specifies different withholding tax rates for imported goods under various parts of the relevant schedules, with separate rates for active taxpayers and non-active taxpayers.

Different rates have also been prescribed for commercial importers, pharmaceutical products, electric vehicle CKD kits and mobile phones.

Profit paid on bank or financial institution accounts and deposits will attract a 20 percent withholding tax for active taxpayers and 40 percent for non-active taxpayers in specified cases. Other categories of profit will be subject to rates of 15 percent and 30 percent.

Separate rates have also been specified for different forms of profit on Sukuk.

Payments to non-residents under various categories will attract withholding tax rates ranging from 5 percent to 20 percent.

IT, Services and E-Commerce

The withholding tax rate on IT and IT-enabled services has been set at 4 percent for active taxpayers and 8 percent for non-active taxpayers, while separate rates apply to other services.

For certain independent professional services, withholding tax has been prescribed at 15 percent for active taxpayers and 30 percent for non-active taxpayers.

For goods sold through e-commerce platforms, payments made through digital or banking channels will attract withholding tax of 1 percent for active taxpayers and 2 percent for non-active taxpayers.

For cash-on-delivery transactions, the corresponding rates are 2 percent and 4 percent.

Export and Social Media Income

The withholding tax rate on exports has been set at 1.25 percent. Export income from computer software, IT and IT-enabled services earned by persons registered with the Pakistan Software Export Board will be subject to a rate of 0.25 percent.

Income earned by digital content creators and social media influencers through social media platforms will attract withholding tax of 5 percent for active taxpayers and 10 percent for non-active taxpayers.

Motor Vehicles

Different withholding tax rates have been prescribed according to engine capacity.

For vehicles up to 850cc, the rate is 0.50 percent for active taxpayers and 1.50 percent for non-active taxpayers. For vehicles with engine capacity above 3,000cc, the respective rates are 12 percent and 36 percent.

The rate card also provides fixed-amount tax rates for vehicles with different engine capacities.

Electricity, Telephone and Internet

For commercial and industrial electricity consumers, bills up to Rs500 carry no withholding tax. Bills between Rs500 and Rs20,000 are subject to a 10 percent rate.

For commercial consumers with bills above Rs20,000, the tax is Rs1,950 plus 12 percent of the amount exceeding Rs20,000. For industrial consumers, the corresponding rate is Rs1,950 plus 5 percent of the amount exceeding Rs20,000.

For non-active domestic consumers, monthly electricity bills below Rs25,000 are exempt from withholding tax, while bills of Rs25,000 or more attract a 7.5 percent rate.

For telephone services, 10 percent withholding tax applies to the amount exceeding Rs1,000 on monthly bills. Internet, mobile phone and prepaid internet or telephone cards are subject to a 15 percent withholding tax on the bill or sale price.

Property Transactions and Other Payments

The rate card prescribes a withholding tax rate of 2.75 percent for active taxpayers and 11.50 percent for non-active taxpayers on the transfer of immovable property.

Rates have also been specified for sales to distributors, dealers and wholesalers, sales to retailers, purchases of immovable property, remittances abroad and the 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 as the actual law. The rate card itself cannot be treated as a legal document before a court or any other legal forum.