Income Tax Returns
What is a Tax Return?
A tax return is a document submitted to the Federal Board of Revenue to declare an individual's or entity's income, deductions, taxes paid, and any tax due. Filing is a legal obligation for those who meet specific criteria under the Income Tax Ordinance, 2001.
What is Taxable income? Taxable income may be defined as total income for the year reduced by the total of deductible allowances for the year (Section 10).
Where Total income may be defined as income from all heads as per Section 11 including salary, income from property, business, capital gains, income from other sources; and deductible allowances may be found in Part IX of the ITO.
Who is Required to File a Tax Return?
The following individuals and entities are required to file an income tax return according to Section 114 of the Income Tax Ordinance, 2001:
1) Every Company
Company is defined under section 80(2)(b) of ITO as companies under the Companies Act, 2017, foreign corporations, trusts, and cooperatives deemed to be companies.
2) Individuals Whose Income Exceeds the Tax-Free Threshold
Where income above Rs. 600,000/year for all individuals and Association of Persons is taxable income.
Associations of persons would include a firm, a Hindu undivided family, any artificial juridical person and anybody of persons formed under a foreign law, but does not include a company as per section 80(2)(a).
3) Individuals with Income Subject to Final Taxation
Applies to contracts, exports, dividends, etc, defined in section 169.
4) Persons Charged to Tax in Any of the Last Two Tax Years
If a person has filed tax in the fiscal year of 2023 and 2024, they must file in 2025 as well.
5) Persons Who Wish to Carry Forward a Loss
If loss is incurred within a tax year and has to be carried forward, it must be reported in the same tax year for it to be carried forward to the next.
6) Any person who owns immovable property of land area ≥ 500 Sq yards or owns a flat in municipal limits, cantonments, or ICT. *
7) Any person who owns immovable property with a land area ≥ 500 square yards in a rating area.*
8) Any person who owns a flat with covered area ≥ 2,000 sq. ft in a rating area.*
9) Any person who owns a motor vehicle with engine capacity above 1000cc.*
10) Holders of National Tax Number (NTN)
Anyone who holds a National Tax Number as prescribed by the Federal Board of Revenue (FBR) must file tax returns.
11) Individuals With High Electricity Consumption
I.e. the Annual commercial/industrial bill exceeds Rs. 500,000.
12) Professionals Registered with Regulatory or Professional Bodies
a. Chamber of Commerce and Industry
b. Any trade or business association
c. Any market committee
d. Any professional body such as Pakistan Engineering Council, Medical & Dental Council, Bar Councils, Institute of Chartered Accountants Pakistan, Institute of Cost and Management Accountants of Pakistan
13) Resident Individuals with Foreign Income or Assets
To be considered a resident in the tax year, the individual must be present in Pakistan ≥183 days with foreign income/assets (82).
For foreign income, a person with
a. an income more than 10,000 USD
b. foreign assets valued more than 100,000 USD, must file a return in Pakistan as well (116A).
14) Persons Notified by the FBR
As notified by FBR with Minister’s approval you must file returns.
15) Individuals Earning Business Income Between Rs. 300,000 and Rs. 400,000
Who is Not Required to File?
Section 115 of the Income Tax Ordinance, 2001
A person covered under starred items (e.g., owning a vehicle or property) may be exempt if they are:
1. A widow
2. An orphan below the age of 25
3. A disabled person (certified as per applicable law)
4. A non-resident (less than 183 days in Pakistan during the tax year)
What is a Tax Return?
A tax return is a document submitted to the Federal Board of Revenue to declare an individual's or entity's income, deductions, taxes paid, and any tax due. Filing is a legal obligation for those who meet specific criteria under the Income Tax Ordinance, 2001.
What is Taxable income? Taxable income may be defined as total income for the year reduced by the total of deductible allowances for the year (Section 10).
Where Total income may be defined as income from all heads as per Section 11 including salary, income from property, business, capital gains, income from other sources; and deductible allowances may be found in Part IX of the ITO.
Who is Required to File a Tax Return?
The following individuals and entities are required to file an income tax return according to Section 114 of the Income Tax Ordinance, 2001:
1) Every Company
Company is defined under section 80(2)(b) of ITO as companies under the Companies Act, 2017, foreign corporations, trusts, and cooperatives deemed to be companies.
2) Individuals Whose Income Exceeds the Tax-Free Threshold
Where income above Rs. 600,000/year for all individuals and Association of Persons is taxable income.
Associations of persons would include a firm, a Hindu undivided family, any artificial juridical person and anybody of persons formed under a foreign law, but does not include a company as per section 80(2)(a).
3) Individuals with Income Subject to Final Taxation
Applies to contracts, exports, dividends, etc, defined in section 169.
4) Persons Charged to Tax in Any of the Last Two Tax Years
If a person has filed tax in the fiscal year of 2023 and 2024, they must file in 2025 as well.
5) Persons Who Wish to Carry Forward a Loss
If loss is incurred within a tax year and has to be carried forward, it must be reported in the same tax year for it to be carried forward to the next.
6) Any person who owns immovable property of land area ≥ 500 Sq yards or owns a flat in municipal limits, cantonments, or ICT. *
7) Any person who owns immovable property with a land area ≥ 500 square yards in a rating area.*
8) Any person who owns a flat with covered area ≥ 2,000 sq. ft in a rating area.*
9) Any person who owns a motor vehicle with engine capacity above 1000cc.*
10) Holders of National Tax Number (NTN)
Anyone who holds a National Tax Number as prescribed by the Federal Board of Revenue (FBR) must file tax returns.
11) Individuals With High Electricity Consumption
I.e. the Annual commercial/industrial bill exceeds Rs. 500,000.
12) Professionals Registered with Regulatory or Professional Bodies
a. Chamber of Commerce and Industry
b. Any trade or business association
c. Any market committee
d. Any professional body such as Pakistan Engineering Council, Medical & Dental Council, Bar Councils, Institute of Chartered Accountants Pakistan, Institute of Cost and Management Accountants of Pakistan
13) Resident Individuals with Foreign Income or Assets
To be considered a resident in the tax year, the individual must be present in Pakistan ≥183 days with foreign income/assets (82).
For foreign income, a person with
a. an income more than 10,000 USD
b. foreign assets valued more than 100,000 USD, must file a return in Pakistan as well (116A).
14) Persons Notified by the FBR
As notified by FBR with Minister’s approval you must file returns.
15) Individuals Earning Business Income Between Rs. 300,000 and Rs. 400,000
Who is Not Required to File?
Section 115 of the Income Tax Ordinance, 2001
A person covered under starred items (e.g., owning a vehicle or property) may be exempt if they are:
1. A widow
2. An orphan below the age of 25
3. A disabled person (certified as per applicable law)
4. A non-resident (less than 183 days in Pakistan during the tax year)
