Income Tax Law Matrix

The Income Tax Law Matrix for SMEs provides a clear overview of tax rates and regulations applicable to different categories of small and medium enterprises in Pakistan. It outlines specific tax structures for manufacturers, traders, startups, and service providers, making it easier for business owners to understand their tax obligations and benefits. This resource helps SMEs simplify taxation, providing clear guidance in easy terms on compliance requirements and potential savings

Business Category Legal status Applicable Rule/Rate of Tax

Business Category

Manufacturer 		Individual/Partnership/Company Turnover not exceeding Rs. 250 million NTR 7.5%/15% of Taxable Income FTR 0.25%/0.5% of gross turnover

Store

Traders/Shopkeepers 		Indicative income based taxation i.e. from Rs. 0.6M to 2.3M on different slabs i.e. Rs.1,000/month To Rs. 30,000/month NTR FTR For 50 sqft in a commercial area, makeshift shops ("khokas")

Applicable Rule/Rate of Tax

Startups 		Technology-driven products or services, spanning any sector of the economy.
  • The startup must be certified by the Pakistan Software Export Board (PSEB).
  • Turnover must not exceed one hundred million PKR in each of the last five tax years.
Zero Tax
100 percent tax credit (subject to some conditions):
  • In a tax year in which the startup is certified and;
  • In the subsequent two tax years following certification.

Applicable Rule/Rate of Tax

Service Providers 		Normal (Minimum) tax regime other than those who do not fall in indicative based taxation

Applicable Rule/Rate of Tax

Small Company 		Company
  • Has paid-up capital plus undistributed reserves not exceeding 50 million rupees.
  • Has annual turnover is less than Rs. 250 million rupees.
  • Is not formed by the splitting up or reconstitution of an existing company.
  • Has employees not exceeding 250 at any time during the year.
  • Is not a small and medium enterprise as defined in clause (59A). (59A).
  • Tax rate 20% (on taxable income)