Tax

The National Tax Number is your registration with the Federal Board of Revenue under the Income Tax Ordinance, 2001. As of mid-2026, an individual's CNIC serves as the NTN once registered, while companies, LLPs, and associations of persons receive a separate NTN on registration. Any person earning taxable income, running a business, or wanting to appear on the Active Taxpayers List needs one.

Largely yes. As of mid-2026, SECP incorporation is integrated with the FBR, so a newly incorporated company is issued an NTN as part of the process. The company still needs to complete its profile on the FBR's Iris portal — business activity, bank account, and premises details — before it can file returns and operate as a withholding agent, and sales tax registration is a separate step.

A filer is a person who appears on the FBR's Active Taxpayers List (ATL), which the FBR publishes and updates based on who has filed their income tax return for the relevant year. ATL status is checked by banks, property registrars, vehicle authorities, and withholding agents, and it determines which withholding rates apply to you. Filing on time is what earns and keeps the status.

Non-filers pay higher withholding tax rates on a range of transactions — including banking transactions, property dealings, and vehicle purchases [RATES — TO BE VERIFIED BY REVIEWING LAWYER] — and recent Finance Acts have added outright restrictions on certain economic transactions by persons outside the tax net [SCOPE — TO BE VERIFIED BY REVIEWING LAWYER]. For a business, non-filer status of the entity or its directors also complicates banking and procurement. The fix is procedural: register, file, and get onto the ATL.

Recent Finance Act amendments introduced an intermediate category for people who file their returns after the due date: they appear on the ATL but face withholding rates on certain transactions that sit between filer and non-filer rates [DETAILS — TO BE VERIFIED BY REVIEWING LAWYER]. The practical lesson as of mid-2026 is that filing late is better than not filing, but filing on time is the only way to get the full filer treatment.

A company pays corporate income tax on its taxable profits at the applicable corporate rate [RATE — TO BE VERIFIED BY REVIEWING LAWYER], and depending on income levels may also attract super tax [TO BE VERIFIED BY REVIEWING LAWYER]. Separately, it acts as a withholding agent on salaries and many payments, may need sales tax registration for its goods or services, and its shareholders bear withholding tax when dividends are paid. Each of these is a distinct compliance stream with its own registrations and filings.

The Income Tax Ordinance, 2001 defines a small company by reference to conditions including limits on paid-up capital, turnover, and employee numbers, and small companies are taxed at a reduced corporate rate [CRITERIA AND RATE — TO BE VERIFIED BY REVIEWING LAWYER]. The status is assessed against the statutory conditions each year, not elected once. Whether a new business qualifies is worth checking before incorporation, because capital structure choices can affect it.

They are separate taxes run by separate authorities. Sales tax on goods is federal, levied under the Sales Tax Act, 1990 and administered by the FBR, while sales tax on services is provincial — administered by the Sindh Revenue Board, Punjab Revenue Authority, KPRA, and BRA in their provinces, with Islamabad Capital Territory services taxed under federal arrangements. A business can be registered under both regimes at once, each with its own returns, and classifying what you supply as goods or services is the threshold question.

A business making taxable supplies of goods generally must register with the FBR under the Sales Tax Act, 1990, subject to statutory exclusions and thresholds such as the cottage-industry carve-out [THRESHOLDS — TO BE VERIFIED BY REVIEWING LAWYER]. Service providers register instead with the revenue authority of the province where the services are rendered or received, under that province's services sales tax law. Registration triggers monthly returns and invoicing obligations, so timing the registration correctly matters.

The Income Tax Ordinance, 2001 requires companies to deduct tax at source when making certain payments — salaries, payments to suppliers and contractors, rent, and others — and to deposit the deducted tax with the FBR. The company must then file withholding statements reporting what it deducted and from whom. Failure to withhold or deposit exposes the company itself to recovery and default surcharge, so this is the company's liability, not just the payee's.

Under section 149 of the Income Tax Ordinance, 2001, an employer must estimate each employee's annual tax under the salary slabs [SLAB RATES — TO BE VERIFIED BY REVIEWING LAWYER], deduct a proportionate amount from each month's salary, and deposit it with the FBR. The employer adjusts for credits and documented deductions the employee is entitled to, and files periodic withholding statements. Getting payroll withholding wrong creates exposure for the employer, which is why it belongs in the compliance calendar, not just the payroll spreadsheet.

Generally yes, if you are a company or another prescribed withholding agent: section 153 of the Income Tax Ordinance, 2001 requires deduction on payments for goods, services, and contracts, at rates that differ by category and by whether the payee is on the ATL [RATES — TO BE VERIFIED BY REVIEWING LAWYER]. Some payees hold exemption or reduced-rate certificates, which you should collect and verify before paying gross. Vendors should be onboarded with their NTN and ATL status checked as a standard step.

The Income Tax Ordinance, 2001 contains a definition of a startup tied to certification by the Pakistan Software Export Board, with a time-limited profits exemption in the Second Schedule for qualifying businesses [CURRENT AVAILABILITY AND CONDITIONS AS OF MID-2026 — TO BE VERIFIED BY REVIEWING LAWYER]. The exemption is not automatic: certification, the nature of the business, and the exemption window all have to line up. Founders should confirm eligibility before building the incentive into their financial model.

Export proceeds of IT and IT-enabled services received through banking channels have been taxed under a concessional final-tax regime, typically conditioned on PSEB registration and remittance documentation [RATE AND CONDITIONS — TO BE VERIFIED BY REVIEWING LAWYER]. The legal work is in the conditions: registering with PSEB, routing proceeds correctly, and keeping the remittance certificates that support the treatment. Exporters who skip the paperwork risk losing the concession in assessment.

The tax year generally runs July to June, and as of mid-2026 companies with a June year-end file by 31 December, while companies with a special year-end have correspondingly different dates; individuals and AOPs ordinarily file by 30 September. The FBR frequently extends deadlines by notification, but extensions should be treated as grace, not planning assumptions. Filing on time is also what secures ATL status for the following period.

Companies and larger taxpayers must pay their estimated tax for the year in quarterly installments under section 147 of the Income Tax Ordinance, 2001, calculated by a statutory formula based on prior-year figures and current turnover. The installments are credited against the final liability when the return is filed. Underpaying installments can attract default surcharge, so the quarterly dates belong in the compliance calendar alongside the annual return.

The Income Tax Ordinance, 2001 requires taxpayers to maintain prescribed books and records and, as of mid-2026, to retain them for six years after the end of the relevant tax year — longer if proceedings for that year are still pending. Sales tax law imposes its own parallel record-keeping requirements. Poor records shift assessments onto estimates, which almost always resolve against the taxpayer, so retention is protective rather than clerical.

Changes to your registration — address, business activity, bank accounts, branches — are made through the modification process on the FBR's Iris portal, with parallel updates to any sales tax registration. Keeping the FBR record aligned with your SECP record and your bank's file matters, because mismatches trigger verification holds and can delay refunds and exemption certificates. Treat any corporate change as a multi-regulator update, not an SECP-only event.

The FBR has been progressively requiring categories of businesses — beginning with Tier-1 retailers and expanding to other sectors — to integrate their sales systems with FBR platforms for real-time invoice reporting [CURRENT SCOPE AS OF MID-2026 — TO BE VERIFIED BY REVIEWING LAWYER]. Falling within a covered category triggers technical integration duties and penalties for non-integration. Businesses near the boundary should get the classification question answered before the FBR raises it.

They are taxed differently: a sole proprietor's business income is taxed at individual progressive rates on the owner directly, while a company pays corporate tax and its shareholders face withholding on dividends when profits are distributed [RATES — TO BE VERIFIED BY REVIEWING LAWYER]. A company adds withholding-agent duties and corporate filings but brings limited liability and cleaner ownership for investors. The right answer depends on profit levels, reinvestment plans, and whether outside investment is coming — it is a structuring decision, not just a rate comparison.