Introduction
If you live, work, or do business in Pakistan, you might wonder whether you need to file a tax return. The rules are outlined in Section 114 of the Income Tax Ordinance, 2001. Whether you are an individual, a company, or even a nonprofit organization, this guide breaks down exactly who is legally required to file a return — in simple language.
1. Every Company Must File Income Tax
All companies registered in Pakistan must file a tax return, no matter how much or how little they earn. This applies even if the company made no income at all or earned income that is tax-exempt.
2. Individuals with Taxable Income must file an income tax return
You must file a return if your income in a year is:
- More than Rs. 600,000 (if you earn a salary)
- More than Rs. 400,000 (if your income comes from business or other sources)
3. Non-Resident Persons with Pakistan-Source Income must file an income tax
Even if you live outside Pakistan, you must file a return if you earn any income from a Pakistani source. This includes rent, dividends, business profits, or any other income generated in Pakistan.
4. Owners of Expensive Property or Vehicles
You must file a return if you own:
- Property valued over Rs. 5 million, or
- A motor vehicle with an engine capacity above 1000cc
Even if your income is below the taxable threshold, owning such assets makes you legally bound to file.
5. Persons Registered Under the Sales Tax Act
If you are registered for sales tax — such as a trader, manufacturer, or service provider — you are required to file an income tax return as well.
6. Anyone Claiming a Tax Refund or Adjustment
If you want to claim a refund for excess tax deducted (like on your bank account, mobile bills, or salary), you need to file a return, even if you don’t meet the income threshold.
7. Holders of National Tax Numbers (NTNs)
Once you apply for and receive a National Tax Number (NTN), you are expected to file tax returns, regardless of your income status.
8. High Electricity Consumers
If your annual electricity bill exceeds Rs. 500,000 (for a commercial or industrial connection), you must file a tax return. This rule is meant to capture people with higher living or business expenses.
9. Professionals Registered with Licensing Bodies
If you are registered with a professional body — such as a medical council, engineering council, or accountancy board — you are expected to file a tax return, regardless of how much you earn.
10. Non-Profit Organizations and Trusts
All non-profit entities, welfare societies, and trusts are required to file income tax returns, even if their income is exempt from tax.
11. Persons Under Final Tax Regime
If your income is taxed at a fixed rate (called final taxation), you are still required to file a return. This includes certain contractors, exporters, and others in special categories.
12. People Who Want to Remain on the Active Taxpayer List (ATL)
Even if you do not fall under any of the above categories, you may choose to file a return just to stay on the Active Taxpayer List (ATL). Being on the ATL means you get lower tax rates on banking transactions, property purchases, and vehicle registrations.
What Happens If You Don’t File?
If you are required to file and fail to do so, you could face:
- Fines and penalties
- Legal notices
- Disqualification from the ATL
- Higher withholding taxes on transactions
Final Thoughts
The rules for filing an income tax return in Pakistan are broad and cover many different types of people and businesses. If you’re unsure whether you’re required to file, the safest option is to consult a tax expert or lawyer. Staying compliant with tax law not only keeps you out of trouble — it also opens doors for financial benefits and better creditworthiness.
Need help filing your return?
Our legal tax team offers full services for income tax, sales tax, and corporate matters. Whether you’re an individual or a business, we can handle your paperwork and filing professionally.