Pakistan encompasses a rich diversity of landscapes, starting in the northwest, from the soaring Pamirs and the Karakoram Range through a maze of mountain ranges, a complex of valleys, and inhospitable plateaus, down to the remarkably even surface of the fertile Indus River plain, which drains southward into the Arabian Sea. Here’s a detailed round up of all payroll compliance requirements and regulations, a crucial aspect of payroll services.
Income Tax
Overview and Residential Status
In Pakistan, the Income tax is governed by Income Tax Ordinance, 2001 which has been replaced recently by Income tax ordinance amended up to June 30, 2022 (The Ordinance). In this section, the provisions related to Taxation of Employment Income has been discussed.
The tax year in Pakistan runs from July 01 to June 30 and it is denoted by stating the calendar year in which the end date falls i.e., in case of tax year July 01, 2022 to June 30, 2023 it will be denoted as calendar year 2023.
The Ordinance defines the criteria for considering an individual residential status as follows:
- Any individual present in Pakistan for a period of 183 or more days in the tax year or
- An individual should be employee or official of the Federal Government or a Provincial Government posted abroad in the Tax Year
- An individual being Citizen of Pakistan and is not present in any other country for more than one hundred and eighty-two days during the tax year or who is not a resident taxpayer of any other country
Despite the mention of the criteria to determine the residential status of individuals the tax rates and other provisions for salaried individuals remains the same for both Resident and Non-Resident category.
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