Taxation of Salary Income for Resident and Non-Resident Pakistanis

As a Pakistani taxpayer, understanding the taxation of your income is essential to ensure compliance with the law and avoid any legal issues. When it comes to salary income, the treatment of taxation varies for resident and non-resident persons.

Resident Persons:

For resident persons, any and all income earned by them, whether through physical or online channels, is taxable in Pakistan. This includes salary income earned from employment under an employment contract. Therefore, if you are a resident Pakistani earning salary income, you are required to pay taxes on that income.

Non-Resident Persons:

For non-resident persons, only the income earned from a Pakistan source is taxable. This means that if you are a non-resident Pakistani earning salary income from a foreign employer, that income is exempt from tax in Pakistan. However, tax may be deducted at source by the country where the income is earned and duly submitted to the relevant government. Even if that income from salary is sent into Pakistan, it will still be exempt from tax in Pakistan.

Government Employees Designated Abroad:

Federal or Provincial Government employees designated abroad are treated as residents for payment of tax purposes, despite not physically staying in Pakistan for the relevant tax year. Hence, their salary income is taxable in Pakistan.

It is important to note that tax laws and regulations can change over time, so it is essential to stay up-to-date with the latest developments to ensure compliance with the law.

In conclusion, the taxation of salary income for resident and non-resident Pakistanis is different. For resident persons, all income earned is taxable, while for non-residents, only Pakistan source income is taxable. Federal or Provincial Government employees designated abroad are also treated as residents for tax purposes. It is crucial to stay informed of any changes in tax laws and regulations to avoid any legal issues.

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