Pakistan – Finance Act 2025 Changes to Tax Rates and Surcharge Rate
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On 10 June 2025, the finance minister of Pakistan Mr. Muhammad Aurangzeb presented the budget proposals for the fiscal year 2025–2026 (FY26). These proposals passed into parliament under the Finance Act of 2025. The changes include updated tax rate tables for salaried individuals, effective 1 July 2025, are outlined below:
Tax Rates
| Taxable Income (Rs) | 2025/2026 | 2024/2025 |
|---|---|---|
| 0 - 600,000 | 0% | 0% |
| 600,001 - 1,200,000 | 1% of the amount exceeding Rs. 600,000 | 5% of the amount exceeding Rs. 600,000 |
| 1,200,001 - 2,200,000 | Rs. 6,000 + 11% of the amount exceeding Rs. 1,200,000 | Rs. 30,000 + 15% of the amount exceeding Rs. 1,200,000 |
| 2,200,001 - 3,200,000 | Rs. 116,00 + 23% of the amount exceeding Rs. 2,200,000 | Rs. 180,000 + 25% of the amount exceeding Rs. 2,200,000 |
| 3,200,001 - 4,100,000 | Rs. 346,000 + 30% of the amount exceeding Rs. 3,200,000 | Rs. 430,000 + 30% of the amount exceeding Rs. 3,200,000 |
| 4,100,001 | Rs. 616,000 + 35% of the amount exceeding Rs. 4,100,000 | Rs. 700,000 + 35% of the amount exceeding Rs. 4,100,000 |
Surcharge
The surcharge rate for salaried individuals with taxable income over Rs. 10,000,000 introduced on 1 July 2024 has been reduced to 9% (previously 10%), effective 1 July 2025.
Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change.
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Pakistan – Finance Act 2025 Changes to Tax Rates and Surcharge Rate – 1 July 2025
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