Income tax return filing can be a complex and time-consuming process, especially in a dynamic regulatory environment. Hashtag., with its team provides comprehensive Taxation services to businesses and individuals. Our focus is on minimizing tax exposure, ensuring compliance with tax laws, and providing expert guidance to optimize your tax savings.
In Pakistan, NTN stands for National Tax Number. It is a unique identifier issued by the Federal Board of Revenue (FBR) to taxpayers. The NTN is used for tax registration and helps the government track tax liabilities and compliance. Format: It usually consists of a series of digits unique to each taxpayer. Its related with direct and Indirect texes.
Individuals: Those who earn taxable income and are required to file annual tax returns. Businesses: Companies, partnerships, and sole proprietorships must obtain an NTN for tax purposes. Freelancers and Contractors: Individuals providing services or goods who earn above a certain threshold. Property Owners: Those receiving rental income are also required to register for an NTN.
To calculate total income and charge taxes, further classification is necessary. Direct
taxes are thus classified as:
1. Income tax
2. Property tax
3. Capital Gain Tax
1. Income Tax
Following certain allowances, income tax is levied on all earnings obtained by private
individuals. Income tax is a significant source of government revenue in the majority of economies. It depends on a person's income. Depending on how much a worker makes, a set proportion of his or her pay is withheld. The government is anxious to include credits and deductions that assist people to reduce their tax obligations, which is a
good thing.
3. Property Tax
Any resident who owns immovable property in Pakistan is subject to presumed income
tax. This deemed income will be calculated as 5% of the immovable property's fair market value and such income is subiect to a 20% specified tax rate. It is a tax based on the property's worth that the owner must pay. To sustain public services property tax is levied on assets.
3. Capital Gain Tax
There are basically two types of taxes - direct and indirect taxes. The following are the differences between the two:
- Direct taxes refer to taxes that are filed and paid by an individual directly to the government. Indirect taxes, on the other hand, are taxes that can be transferred to another entity. Therefore, the burden of paying them can be put on another person's shoulders.
- Direct taxes can be evaded in the absence of proper collection administration. Indirect taxes cannot be escaped from because these are charged automatically on goods and services.
- Direct taxes can help address inflation while indirect taxes can lead to inflation.
- Direct taxes lessen the savings of earners, but indirect taxes encourage the opposite because they make products and services more expensive and unaffordable.
-Direct taxes are imposed only on people that belong to various income brackets. Indirect taxes, on the other, can be felt by everyone who buys goods and avails services
Like direct taxes, indirect taxes are also further classified:
1. Sales Tax
2. Value Added Tax
3. Excise Duty
4. Custom duty
1. Sales Tax
A sales tax is one of the most widespread indirect taxes. Everything is subject to sales taxes or GST, including groceries, fast food, gadgets, and apparel. The city, county, or state where the transaction is made has different sales taxes.
2. Value-Added Tax
When a product moves through numerous manufacturing or production chain stages,
this tax is imposed on products. The product should first be provided through a supply chain, then it should get through production, and finally, it should get to stores or
markets for sales. Each stage receives a percentage of the tax applied.
3. Exice Duty
Controls over the production and distribution of excisable goods, like alcoholic
beverages and illegal substances, are the responsibility of the Excise Wing of the
Taxation Department.
4. Custom Duty
When any commodity or service is imported from abroad, the government is subject to
a certain form of duty known as customs duty. This is often paid in Pakistan at the time
Annual Income Tax Returns are documents filed with the tax authority to report income, deductions, and taxes owed or refunded for a specific tax year. While, Wealth Statement is a declaration of assets, liabilities, and net worth as of a certain date, submitted and reconciled with income tax returns to provide a position of financial status.
As per Income Tax Ordinance, 2oo1. The following persons are required to furnish a return of income for a tax year:
• Every Company (Registered under the Company Act. 2017 or eguivalent)
• Every Partnership Firm (AOP)
• Every Person whose income exceed the prescribed limit (Such as for Salary Annual Rs. 600,000 and for Business Annual Income Rs.400,000).
• Every NPO as per 2(36) of ITO, 2001
• Every NTN holder.
• Every Person:
• Charged to Tax in any preceding two years.
• Claim a loss carry forward.
• Holder of commercial or industrial electricity connection where annual bill amount exceeds Rs. 500,000/-
• A resident person.Trade Body / Trade Association, Bar Councils, Medical & Dental Councils, Member of ICAP & ICMA.
• Owns motor vehicle having engine capacity above 1000 CC.
• Owns immovable property with a land area of
• 500 square vards or more or any flat located in area of Municipal. Cantonment or Islamabad (ICT)
• 500 square yards or more or any flat having covered area 2000 square feet or more located in a rating area.
| Description | Filer | Non Filer | Late Filer |
|---|---|---|---|
| Cash Withdrawal / Banking Transaction | 0% | 0.8% | - |
| International. Transaction through Debit/Credit Card | 5% | 10% | - |
| Purchase of Property | 1.5 to 2.5% | 10.5 to 18.5% | 4.5 to 6.5% |
| Sale of Property | 4.5 to 5.5% | 11.5% | 7.5 to 9.5% |
| Tax on Saving Account Profit | 20% | 40% | - |
| Tax on Specifies Services | 3% | 6% | - |
| Tax on Services | 4% - 9% - 11% | 8% - 18% - 22% | - |
| Rent Income | 0 to 25% | 10 to 50% | - |
| Prize Bonds | 15 to 20% | 30 to 40% | - |
| Motor Vehicle Leasing | 0% | 12% | - |
| Purchase of Vehicles | 0.5% to 12% of value | 1.5% to 36% of value | - |
| Vehicle Annual Token Tax | Rs. 800 to 10,000 | Rs. 1,600 to 20,000 | - |
| Tax on Commission | 12% | 24% | - |
| Monthly Domestic Electricity Bill > Rs. 25,000 | 0% | 7.5% | - |
| Sale to Retailers Manufacturer, Distributors, Dealers, Wholesalers & Commercial Importers | 0.1% | 2% | - |
| Property Auction | 5% | 10% | - |
| Issuance of Bonus Share | 10% | 20% | - |
| Functions and Gathering | 10% | 20% | - |
Tax obligations impact investors' profits, and uninformed choices can increase liabilities. Navigating evolving tax laws is complex and time-consuming. Professional tax services help save time, reduce costs, and ensure compliance. We stay updated on tax laws to provide tailored solutions, helping clients manage corporate and personal taxation efficiently.
CONTACT US
Your Trusted Company Formation and Compliance Partner We specializes in providing expert registration and compliance services in Pakistan and the USA. From business registrations to managing tax filings, bookkeeping, and statutory compliance, we ensure your business stays on track. With us, every step of business registration service online is seamless, secure, and designed to help you succeed.