ByCalculating your taxable income in Pakistan involves understanding your total income and subtracting deductible expenses. Here’s a breakdown of the steps:
1. Gather your documents:
- Salary slips
- Business accounts and financial statements (if applicable)
- Investment statements and rental income documents
- Bank statements
- Receipts for medical expenses, children’s education, charity donations, and other deductible expenses
2. Calculate your total income:
- Add up your income from all sources, including:
- Salary
- Business profits
- Rental income
- Investment income
- Other income (interest, royalties, Prize Bonds etc.)
3. Identify deductible expenses:
- Review the expenses allowed for deduction by the Federal Board of Revenue (FBR). Some common deductible expenses include:
- Medical expenses (up to 10% of basic salary)
- Children’s education fees (up to Rs. 5%) (if gross income is less than Rs. 1.5 million)
- Tax Credit for Charitable donations (subject to certain conditions)
- Tax Credit for Approved Pension Fund (subject to certain conditions)
4. Calculate your deductible expenses:
- Add up the total amount of all deductible expenses.
5. Calculate your taxable income:
- Subtract your total deductible expenses from your total income. This will give you your taxable income.
6. Apply tax slabs:
- Refer to the current tax brackets for individuals and businesses in Pakistan. Calculate the tax amount based on your taxable income and the applicable tax rate.
Important notes:
- This is a simplified guide, and specific rules and restrictions may apply to different income sources and expenses.
- It’s always recommended to consult a tax professional for personalized advice and accurate calculations, especially if your financial situation is complex.
- You can find the latest tax laws and regulations on the FBR website: https://www.fbr.gov.pk/
Here are some helpful tools to assist with your tax calculations:
- Iris (FBR online tax filing platform): https://iris.fbr.gov.pk/
- Tax software: Several tax software options are available in Pakistan, offering guided calculations and filing assistance.
- Tax calculators: Various online tax calculators can estimate your tax liability based on your income and deductions
