Pakistan Budget 2025–26: New Income Tax Rates for Salaried Class & Freelancers
The Pakistan Budget 2025–26 introduces major relief for the salaried class, along with tighter regulations for freelancers and the digital economy. Below are the latest verified income tax slabs, examples, and filing tips for FY 2025–26.
Latest Income Tax Slabs for Salaried Individuals (FY 2025–26)
| Annual Income (PKR) | Tax Rate |
|---|---|
| 0 – 600,000 | 0% |
| 600,001 – 1,200,000 | 2.5% of amount exceeding 600,000 |
| 1,200,001 – 2,200,000 | 6,000 + 11% of amount exceeding 1,200,000 |
| 2,200,001 – 3,200,000 | 116,000 + 23% of amount exceeding 2,200,000 |
| 3,200,001 – 4,100,000 | 346,000 + 30% of amount exceeding 3,200,000 |
| Above 4,100,000 | 616,000 + 35% of amount exceeding 4,100,000 |
Example: If your annual income is PKR 2,000,000, your total tax will be:
- 0 – 600K: 0%
- 600K–1.2M: 2.5% → Rs. 15,000
- 1.2M–2M: 11% → Rs. 88,000
- Total Tax: Rs. 103,000
Freelancer & Digital Earnings Tax (Upwork, Fiverr, YouTube)
Freelancers earning income from abroad are now under tighter scrutiny. If you’re not registered with PSEB, you’ll be taxed under regular slabs.
Freelancer Tax Rules – Pakistan FY 2025–26
Freelancers (e.g. Upwork, Fiverr, remote developers) fall under a different tax regime than salaried individuals. Here’s how your tax is calculated:
| Freelancer Type | Tax Rate | Conditions |
|---|---|---|
| PSEB Registered IT/ITES Exporters | 0.25% Final Tax | Must be registered with Pakistan Software Export Board (PSEB) Export proceeds must be received via bank and PRC issued with export code File annual tax return and withholding statement |
| Not Registered with PSEB | 1% Final Tax | Export income received via bank PRC must reflect correct IT export code Annual tax return must still be filed |
| Non-Compliant or No Export Proof | Full Income Tax Slabs | No PRC or incorrect source No tax return filed Income not remitted via official channels |
📊 Full Income Tax Slabs for Non-Salaried Individuals (If Not Compliant)
| Annual Income (PKR) | Tax Formula |
|---|---|
| 0 – 600,000 | 0% (Exempt) |
| 600,001 – 1,200,000 | 15% of amount exceeding 600,000 |
| 1,200,001 – 1,600,000 | PKR 90,000 + 20% of amount exceeding 1,200,000 |
| 1,600,001 – 3,200,000 | PKR 170,000 + 30% of amount exceeding 1,600,000 |
| 3,200,001 – 5,600,000 | PKR 650,000 + 40% of amount exceeding 3,200,000 |
| Above 5,600,000 | PKR 1,610,000 + 45% of amount exceeding 5,600,000 |
Freelancer Tax Example 1 – Income: PKR 1,800,000
- 0 – 600,000 = 0%
- 600K – 1.2M (2.5%) = Rs. 15,000
- 1.2M – 1.8M (11%) = Rs. 66,000
- Total Tax: Rs. 81,000
Freelancer Tax Example 2 – Income: PKR 3,500,000
- 600K – 1.2M (2.5%) = Rs. 15,000
- 1.2M – 2.2M (11%) = Rs. 110,000
- 2.2M – 3.2M (23%) = Rs. 230,000
- 3.2M – 3.5M (30%) = Rs. 90,000
- Total Tax: Rs. 445,000
PSEB Registered Freelancers
- Enjoy 100% tax exemption under Section 65F until June 2026
- Must file returns even if exempt
- Remittances must be through legal banking channels
What’s New in Budget 2025–26?
- Salaried Class: Relief in lower slabs (2.5%, 11%)
- Freelancers: Mandatory registration + stricter compliance
- Property Sector: Higher valuation and capital gain tax
- Cash Withdrawals: WHT on non-filers over Rs. 50,000/day
- High Earners (>10M) 9% surcharge (was 10%).
How to File Your Tax in 2025
- Register on FBR IRIS
- Gather salary certificates, bank statements, and WHT documents
- Use Pakistan Salary Tax Calculator
- Submit return before 30 September 2025
- Download & keep FBR acknowledgment slip
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Disclaimer
This content is for informational purposes only. Please consult a certified tax advisor for individual tax matters.
