Income Tax in Pakistan – Who Has to File & What are Penalties?

(Income Tax in Pakistan) Paying taxes is a legal duty of every citizen and one of the main sources of government revenue. In Pakistan, income tax is regulated under the Income Tax Ordinance, 2001, and every eligible person or business must file returns with the Federal Board of Revenue (FBR).

Unfortunately, many people are unsure about who needs to file income tax in Pakistan, what documents are required, and what penalties apply in case of late filing or non-compliance. This guide explains everything step by step.

Who Has to File Income Tax in Pakistan?

According to the Income Tax Ordinance, 2001, the following categories are legally required to file income tax returns:

1. Salaried Individuals
   • If your annual salary exceeds PKR 600,000, you must file a return.
2. Business Owners & Self-Employed Persons
   • If your annual business income exceeds PKR 400,000, filing is mandatory.
3. Property Owners / Landlords
   • Anyone earning rental income from property is required to file.
4. Company Directors / Shareholders
   • Every company registered under SECP must file corporate tax returns.
5. Non-Resident Pakistanis
   • If you earn income within Pakistan, you are liable to tax (exceptions apply).
6. Wealth Statement Requirement
   • Any person owning immovable property of 500 sq. yards or motor vehicle above 1000cc must file, even if income is below the taxable limit.

👉 Bottom line: If you earn or own assets in Pakistan, chances are you are required to file income tax.

How to File Income Tax in Pakistan (Step by Step)

1. Get NTN (National Tax Number)
   • Register online on the IRIS portal (FBR website) using your CNIC.
2. Prepare Documents
   • Salary certificate, bank statements, property details, tax deductions, utility bills.
3. Login to IRIS Portal
   • Fill in your income, deductions, and wealth statement.
4. Submit Online
   • File before the deadline (usually 30th September each year).

Penalties for Not Filing Income Tax in Pakistan

The Income Tax Ordinance, 2001 imposes strict penalties on non-filers and late filers:

• ❌ Late Filing Penalty – Minimum fine of PKR 20,000.
• ❌ Failure to File Return – Penalty of 0.1% of tax payable for each day (max 50%).
• ❌ Exclusion from Filer Benefits – Higher withholding tax on banking transactions, property purchase, and vehicles.
• ❌ Audit & Legal Action – FBR may conduct tax audit and impose additional penalties.

👉 Example: If a person does not file despite being eligible, they may pay double the tax rate on certain transactions like buying cars or property.

Benefits of Filing Income Tax in Pakistan

1. Legal Compliance – Avoid penalties & legal notices.
2. Filer Status – Reduced withholding tax on banking, property, and vehicles.
3. Access to Loans – Banks require tax returns for loan approval.
4. Business Credibility – Filing tax shows you are a responsible taxpayer.

Common FAQs About Income Tax in Pakistan

1. What is the last date to file tax returns in Pakistan?
👉 Usually 30th September, but FBR often extends the deadline.

2. Do students need to file income tax?
👉 Not unless they have taxable income or own assets under wealth statement rules.

3. Can I file income tax myself?
👉 Yes, through the IRIS portal, but many hire tax lawyers for accuracy.

4. What if I missed the deadline?
👉 You can still file late, but with penalties.

5. What law governs income tax in Pakistan?
👉 The Income Tax Ordinance, 2001.

Conclusion

Income tax in Pakistan is mandatory for individuals and businesses who meet the criteria set out in the law. Filing your tax return on time not only saves you from penalties but also provides multiple financial and legal benefits.

📌 Need professional help? Veritas Associates & Legal Consultants provide complete assistance for income tax filing, wealth statements, SECP compliance, and corporate taxation.