Pakistan Finance Act – Income Tax Ordinance 2025

The government has proposed changes to the income tax rates for salaried individuals. As part of this update, the existing tax rate table has been replaced with a new one, outlining revised income slabs and corresponding tax rates.

If a person’s salary makes up more than 75% of their total taxable income, then their income will be taxed according to the rates shown in the new table provided below.

S. No	Taxable Income	Rate of Tax Existing	Rate of Tax Proposed
(1)	(2)	(3)	(4)
1.	Where taxable income does not exceed Rs. 600,000/	0%	0%
2.	Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000	5% of the amount exceeding Rs. 600,000	1% of amount exceeding the Rs. 600,000
3.	Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,200,000	Rs. 30,000 + 15% of the amount exceeding Rs. 1,200,000	Rs. 6,000 + 11% of the amount exceeding Rs.1,200,000
4.	Where taxable income exceeds Rs. 2,200,000 but does not exceed Rs. 3,200,000	Rs. 180,000 + 25% of the amount exceeding Rs. 2,200,000	Rs. 116,000 + 23% of the amount exceeding Rs.2,200,000
5.	Where taxable income exceeds Rs. 3,200,000 but does not exceed Rs. 4,100,000	Rs. 430,000 + 30% of the amount exceeding Rs. 3,200,000	Rs. 346,000 + 30% of the amount exceeding Rs. 3,200,000
6.	Where taxable income exceeds Rs. 4,100,000	Rs. 700,000 + 35% of the amount exceeding Rs. 4,100,000	Rs. 616,000 + 35% of the amount exceeding Rs. 4,100,000

A new provision has been introduced regarding the taxation of pension income.

According to this update, if an individual receives a pension from a former employer during a tax year, the applicable tax rate on that pension income will be determined based on the rates specified in the following table.

S. No.	Description	Rate of Tax
1.	Where the amount of pension received does not exceed rupees ten million	0% of the amount
2.	Where the amount of pension received exceeds rupees ten million	5% of the amount exceeding rupees ten million

The First Schedule
Part-I
Super Tax on High Earning Persons

Proposed changes have been made to the rates of super tax under Section 4C. The revised rates are outlined below:

S. No	Income Under Section 4C	Rate of Tax	Rate of Tax	Rate of Tax
–	–	For tax year 2022	For tax year 2023, 2024 and 2025	For tax year 2026 and onwards
(1)	(2)	(3)	(4)	(5)
1.	Where income does not exceed Rs. 150 million	0% of the Income	0% of the Income	0% of the Income
2.	Where income exceeds Rs. 150 million but does not exceed Rs. 200 million	1% of the Income	1% of the Income	1% of the Income
3.	Where income exceeds Rs. 200 million but does not exceed Rs. 250 million	2% of the Income	2% of the Income	1.5% of the Income
4.	Where income exceeds Rs. 250 million but does not exceed Rs. 300 million	3% of the Income	3% of the Income	2.5% of the Income
5.	Where income exceeds Rs. 300 million but does not exceed Rs. 350 million	4% of the Income	4% of the Income	3.5% of the Income
6.	Where income exceeds Rs. 350 million but does not exceed Rs. 400 million	4% of the Income	6% of the Income	5.5% of the Income
7.	Where income exceeds Rs. 400 million but does not exceed Rs. 500 million	4% of the Income	8% of the Income	7.5% of the Income
8.	Where income exceeds Rs. 500 million	4% of the Income	10% of the Income	10% of the Income

The First Schedule – Part I
Division III: Revised Rates of Dividend Tax

The government has proposed amendments to the tax rates on dividend income. The updated rates are as follows:

(a) 7.5% – Applicable to dividends paid by Independent Power Producers (IPPs), where the dividend qualifies as a pass-through item under an Implementation Agreement, Power Purchase Agreement (PPA), or Energy Purchase Agreement (EPA), and is reimbursable by the Central Power Purchasing Agency (CPPA-G), or its predecessor/successor entities.

(b) 15% – Applies to dividends paid by Real Estate Investment Trusts (REITs) and in all other cases not covered under clauses (a), (ba), (c), and (d).

(ba) 25% on debt-based income and 15% on equity-based income – This applies to mutual funds, depending on the proportion of their average annual investment in debt securities and equities.
Note: If the dividend recipient is a corporate entity, the portion derived from debt securities will be taxed at 29%.

(c)

• 0% – For dividends received by a REIT scheme from a Special Purpose Vehicle (SPV), as defined in the Real Estate Investment Trust Regulations, 2015.
• 35% – For dividends received by any other person from an SPV.

(d) 25% – For dividends received from a company that is not liable to pay tax due to either an exemption of income, carried-forward business losses (under Part VIII of Chapter III), or tax credits (under Part X of Chapter III).

THE FIRST SCHEDULE
PART-I
DIVISION IIIA
RATE FOR PROFIT ON DEBT

Amendments have been proposed to the tax rates applicable under Section 7B, relating to profit on debt. The updated tax rates are as follows:

(a) 15% – On profit or yield in all other cases not covered under clauses (a) or (b).

(b) 20% – On profit or yield paid by a banking company or financial institution on any account or deposit maintained with that institution.

(c) 20% – On profit or yield from Government securities (as referred to in clause (c) of subsection (1) of Section 151), when paid to any entity other than an individual.

S. No.	Description	Tax Year (2024-25)	Tax Year (2025-26)
–	–	Existing	Proposed
01	Profit on Debt	15%	20%

THE FIRST SCHEDULE
PART-I
DIVISION IVA
RATE OF TAX ON PAYMENTS FOR DIGITAL TRANSACTIONS IN E-COMMERCE PLATFORMS

A new Section 6A has been added to the Income Tax Ordinance, 2001, introducing tax on payments for digitally ordered goods and services made through e-commerce platforms, including websites. The applicable tax rates are as follows:

• 1% of the gross amount paid or payable when the payment is made through digital means or banking channels via a payment intermediary.
• 2% of the gross amount paid or payable when the payment is made via Cash on Delivery (COD) through a courier service.

(i) Digital Means or banking channels by payment intermediary

S. No	Description	Tax Rates
1.	Where the amount paid does not exceed rupees ten thousand	1% of the gross amount paid
2.	Where the amount paid exceeds rupees ten thousand but does not exceed rupees twenty thousand	2% of the gross amount paid
3.	Where the amount paid exceeds rupees twenty thousand	0.25% of the gross amount paid

(ii) Cash on Delivery by courier service:

S. No	Description	Tax Rates
1.	On supply of electronic and electrical goods	0.25% of the gross amount paid
2.	On supply of clothing articles, apparels, garments etc.	2% of the gross amount paid
3.	On supply of goods other than mentioned in S. No. 1 and 2 above	1% of the gross amount paid

THE FIRST SCHEDULE
PART-III
DIVISION I
ADVANCE TAX ON DIVIDEND

Dividend Withholding Tax Rates:

(a) 7.5% – Applicable to dividends paid by Independent Power Producers (IPPs), where such dividends are considered pass-through items under an Implementation Agreement, Power Purchase Agreement, or Energy Purchase Agreement, and are reimbursable by the Central Power Purchasing Agency (CPPA-G), or its predecessor/successor entity.

(b) 15% – Applies to dividends received from Real Estate Investment Trusts (REITs) and in all other cases not covered under clauses (a), (ba), (c), or (d).

(ba) 25% and 15% – For dividends received from mutual funds, depending on the proportion of income derived from:

• Debt securities (25%)
• Equities (15%)
  Note: If the recipient of the dividend is a corporate entity, the portion of income derived from debt securities is taxed at 29%.

(c) 0% – On dividends received by a REIT scheme from a Special Purpose Vehicle (SPV);
35% – On dividends received by any other entity from an SPV, as defined under the Real Estate Investment Trust Regulations, 2015.

(d) 25% – On dividends received from a company that has no tax liability due to income exemption, business loss carry-forwards (under Part VIII of Chapter III), or utilization of tax credits (under Part X of Chapter III).

THE FIRST SCHEDULE
PART-III
DIVISION IA
PROFIT ON DEBT

Proposed Amendments to Tax Rates under Section 151:

(a) A 20% tax on the yield or profit paid by a banking company or financial institution on any account or deposit maintained with them.

(b) A 20% tax on the yield or profit from Government securities (as referred to in clause (c) of sub-section (1) of Section 151), when paid to any person other than an individual.

(c) A 15% tax on the yield or profit in all other cases not covered under clauses (a) and (b).

S. No	Description	Tax Year (2024-25)	Tax Year (2025-26)
–	–	Existing	Proposed
01	Profit on Debt	15%	20%
02	Other than banking profit	15%	15%

THE FIRST SCHEDULE
PART-III
DIVISION IIIAA
Gain arising on Disposal of Certain Debt Securities

Proposed Insertion of New Division under Section 151A:

A new provision is proposed whereby a 15% tax shall be deducted at source on the gross amount of capital gain under Section 151A.

THE FIRST SCHEDULE
PART-III
DIVISION II
Payments to Non-Residents

Proposed Revisions to Withholding Tax Rates:

Clause (5):

(i) A withholding tax of 8% on the gross amount payable is proposed for the following service categories:

• Transport services
• Freight forwarding services
• Air cargo services
• Courier services
• Manpower outsourcing services
• Hotel services
• Security guard services
• Software development services
• IT services and IT-enabled services (as defined in Section 2)
• Tracking services
• Advertising services (excluding print and electronic media)
• Share registrar services
• Engineering services
• Car rental services
• Building maintenance services
• Services rendered by the Pakistan Stock Exchange Limited and Pakistan Mercantile Exchange Limited
• Inspection, certification, testing, and training services
• Oilfield services

However, a reduced rate of 4% will apply to IT services and IT-enabled services, as defined in Section 2.

(ii) For all other services not listed above, a withholding tax of 15% on the gross amount payable is proposed.

Clause (6):

Withholding tax rates for payments under clause (c) of sub-section (2A) of Section 152 are proposed as follows:

• 15% of the gross amount payable in the case of sportspersons
• 8% of the gross amount payable in other cases

THE FIRST SCHEDULE
PART-III
DIVISION III
Payments for Goods or Services

Proposed Revisions to Withholding Tax Rates

Clause (2):

(i) A withholding tax of 6% on the gross amount payable is proposed for the following services:

• Transport services
• Freight forwarding services
• Air cargo services
• Courier services
• Manpower outsourcing services
• Hotel services
• Security guard services
• Software development services
• IT services and IT-enabled services (as defined in Section 2)
• Tracking services
• Advertising services (excluding print and electronic media)
• Share registrar services
• Engineering services (including architectural services)
• Warehousing services
• Services rendered by Asset Management Companies
• Data services licensed by the Pakistan Telecommunication Authority (PTA)
• Telecommunication infrastructure (e.g., tower services)
• Car rental services
• Building maintenance services
• Services provided by Pakistan Stock Exchange Limited and Pakistan Mercantile Exchange Limited
• Inspection, certification, testing, and training services
• Oilfield services
• Telecommunication services
• Collateral management services
• Travel and tour services
• REIT management services
• Services rendered by the National Clearing Company of Pakistan Limited

Note: A reduced rate of 4% applies to IT services and IT-enabled services, as defined in Section 2.

(ii) For all other services not listed above, a withholding tax of 15% on the gross amount payable is proposed.

Special Provision: For payments made to electronic and print media for advertising services, the withholding tax rate is 1.5% of the gross amount payable.

Clause (3):

Applicable to payments under clause (c) of sub-section (1) of Section 153:

• 15% of the gross amount payable in case of sportspersons
• 7.5% in case the recipient is a company
• 8% in all other cases

(i) Digital Means or banking channels by payment intermediary:

S. No	Description	Tax Rate
1.	Where the amount paid does not exceed rupees ten thousand	1% of the gross amount paid
2.	Where the amount paid exceeds rupees ten thousand but does not exceed rupees twenty thousand	2% of the gross amount paid
3.	Where the amount paid exceeds rupees twenty thousand	0.25% of the gross amount paid

(ii) Cash on Delivery by Courier Service:

S. No	Description	Tax Rate
1.	On supply of electronic and electrical goods	0.25% of the gross amount paid
2.	On supply of clothing articles, apparels, garments etc.	2% of the gross amount paid
3.	On supply of goods other than mentioned in S. No. 1 and 2 above	1% of the gross amount paid

THE FIRST SCHEDULE
PART-IV
DIVISION X

Advance Tax on Sale or Transfer of Immovable Property

The rate of advance tax under section 236C of the Ordinance has been proposed to be amended as under:

S. No	Amount	Tax Rate	Tax Rate
–	–	Existing	Proposed
(1)	(2)	(3)	(4)
1.	Where the gross amount of the consideration received does not exceed Rs. 50 million	3%	4.5%
2.	Where the gross amount of the consideration received exceeds Rs. 50 million but does not exceed Rs. 100 million	3.5%	5%
3.	Where the gross amount of the consideration received exceeds Rs. 100 million	4%	5.5%

DIVISION XVIII
Advance Tax on Purchase of Immovable Property

The rate of advance tax under section 236K of the Ordinance has been proposed to be amended as under:

S. No	Amount	Tax Rate	Tax Rate
–	–	Existing	Proposed
(1)	(2)	(3)	(4)
1.	Where the fair market value does not exceed Rs. 50 million	3%	1.5%
2.	Where the fair market value exceeds Rs. 50 million but does not exceed Rs. 100 million	3.5%	2%
3.	Where the fair market value exceeds Rs. 100 million	4%	2.5%

THE SECOND SCHEDULE
PART-I
EXEMPTIONS FROM TOTAL INCOME

Status of Clauses under FA 2025:

• Clause (8):
  This clause has been omitted.
• Clause (9):
  The clause has been restored, except for sub-clause (i), which has been omitted through the Finance Act, 2025 (FA 2025).
  The remaining part of Clause (9) reads as follows: Any pension –
  (ii) Granted under the relevant rules to the families and dependents of public servants or members of the Armed Forces of Pakistan who die during service.
• Clause (12):
  This clause has been restored under FA 2025.
• Clause (13):
  An amendment was previously proposed to remove the term “commutation of pension”, but the clause has been restored in its original form via FA 2025.
• Clause (23A):
  Initially proposed for omission, but has been retained through FA 2025.
• Clause (23C):
  Also proposed for omission, but has been restored under FA 2025.
• Clause (57):
  A new sub-clause (4) has been added through FA 2025.

(4) any income of the following funds, institutions, foundations and trusts, namely

S. No.	Name
i	Pension of a former President of Pakistan and his widow
ii	State Bank of Pakistan and State Bank of Pakistan Banking Services Corporation
iii	Federal Board of Revenue Foundation.
iv	Pakistan Council of Scientific and Industrial Research.
v	The Pakistan Water and Power Development Authority established under the Pakistan Water and Power Development Authority Act, 1958 (W. P. Act XXXI of 1958).
vi	Pakistan Agricultural Research Council.
vii	The corporatized entities of Pakistan Water and Power Development Authority from the date of their creation upto the date of f completion of the process of corporatization i.e. till the tariff is notified.
viii	The Prime Minister‘s Special Fund for victims of terrorism
ix	Chief Minister‘s (Punjab) Relief Fund for Internally Displaced Persons (IDPs) of NWFP.
x	Supreme Court of Pakistan – Diamer Bhasha & Mohmand Dams – Fund
xi	National Disaster Risk Management Fund.
xii	The Prime Minister‘s COVID-19 Pandemic Relief Fund – 2020.
xiii	National Endowment Scholarship for Talent (NEST)
xiv	Securities and Exchange Commission of Pakistan.
xv	Privatisation Commission of Pakistan.
xvi	Fauji Foundation.
xvii	Audit Oversight Board
xviii	Supreme Court Water Conservation Account.
xix	Baluchistan Education Endowment Fund (BEEF).
xx	Army Welfare Trust
xxi	Public Private Partnership Authority for tax year 2022 and subsequent four tax years
xxii	Public Private Partnership Authority for tax year 2022 and subsequent four tax years
xxiii	The Prime Minister’s Relief Fund for Flood, Earthquake and Other Calamities with effect on and from the 5th August, 2022
xxiv	Export-Import Bank of Pakistan
xxv	Deposit Protection Corporation established under subsection (l) of section 3 of Deposit Protection Corporation Act, 2016 (XXXVII of 2016).
xxvi	WAPDA First Sukuk Company Limited.
xxvii	Pakistan Domestic Sukuk Company Ltd.
xxviii	WAPDA on issuance of twenty billion rupees TFC‘s/SUKUK certificates for consideration of Diamer Bhasha Dam Projects.
xxix	WAPDA Second Sukuk Company Limited
xxx	Pakistan International Sukuk Company Limited.
xxxi	Second Pakistan International Sukuk Company Limited.
xxxii	Third Pakistan International Sukuk Company Limited.
xxxiii	Islamic Naya Pakistan Certificates Company Limited (INPCCL).
xxxiv	Pakistan Mortgage Refinance Company Limited.;
xxxv	The Pakistan Global Sukuk Programme Company Limited.
xxxvi	Shaheed Mohtarma Benazir Bhutto Institute of Trauma, Karachi
xxxvii	National Memorial Bab-e-Pakistan Trust
xxxviii	Pakistan Poverty Alleviation Fund.
xxxix	National Rural Support Programme
xl	Karandaaz Pakistan from Tax Year 2015 onwards
xli	The Institutions of the Agha Khan Development Network (Pakistan) as contained in Schedule 1 of the Accord and Protocol, dated November 13, 1994, executed between the Government of the Islamic Republic of Pakistan and the Agha Khan Development Network.
xlii	International Finance Corporation established under the International Finance Corporation Act, 1956 (XXVIII of 1956) and provided in section 9 of Article VI of Articles of Agreement 1955 as amended through April 1993.
xliii	Asian Infrastructure Investment Bank and persons as provided in Article 51 of Chapter IX of the Articles of Agreement signed and ratified by Pakistan and entered into force on the 25th December, 2015.
xliv	SAARC Energy Centre
xlv	The Asian Development Bank established under the Asian Development Bank Ordinance, 1971 (IX of 1971).
xlvi	International Islamic Trade Finance Corporation.
xlvii	Islamic Corporation for Development of Private Sector.
xlviii	ECO Trade and Development Bank.
xlix	The Islamic Chamber of Commerce and Industry under the Organization of Islamic Conference (OIC)
I	Commission on Science and Technology for Sustainable Development in the South (COMSATS) formed under International Agreement signed on 5th October, 1994.
II	Saarc Arbitration Council (SARCO).
III	International Parliamentarians‘ Congress
IV	Army Officers Benevolent Fund/Benevolent Fund/Bereaved Family Scheme

New Clause 65B has been added vide FA 2025 as follows:
(65B) Any monetary award received from the Federal or Provincial Government or from a Public Office holder by a sportsperson winning a medal in international Olympic Games representing Pakistan: Provided that this clause shall be applicable from tax year 2025.

Clause (66): Through proposed amendment exemption from total income has been withdrawn in case of the following, newly proposed amended clause (66) is as
under:
(66) Subject to the provisions of section 100C, any income derived by the following institution, foundations, societies, boards, trusts and funds, namely:

Sr. No	Name
(1)	(2)
i	Al-Shifa Trust
ii	Fatimid Foundation
iii	Pakistan Engineering Council
iv	The Institution of Engineers
v	Liaquat National Hospital Association
vi	Greenstar Social Marketing Pakistan (Guarantee) Limited
vii	Gulab Devi Chest Hospital
viii	National Academy of Performing Arts
ix	Pakistan Bar Council
x	Pakistan Centre for Philanthropy
xi	Aziz Tabba Foundation
xii	The Kidney Centre Post Graduate Training Institute
xiii	Pakistan Disabled Foundation
xiv	Forman Christian College
xv	Habib University Foundation
xvi	Begum Akhtar Rukhsana Memorial Trust Hospital
xvii	Al-Khidmat Foundation
xviii	Sardar Trust Eye Hospital, Lahore
xix	Akhuwat
xx	Al-Shifa Trust Eye Hospital
xxi	Sarmaya-E-Pakistan Limited
xxii	Lahore University of Management Sciences, Lahore
xxiii	Ghulam Ishaq Khan Institute of Engineering Sciences & Technology
xxiv	Society for the promotion of Engineering Sciences and Technology in Pakistan (SOPREST)
xxv	Businessmen Hospital Trust
xxvi	Baitussalam Welfare Trust
xxvii	Alamgir Welfare Trust International
xxviii	Foundation University
xxix	Burhani Qarzan Hasnan Trust
xxx	Saifee Hospital Karachi
xxxi	Saifiya Girls Taalim Trust
xxxii	Balochistan Bar Council
xxxii	Islamabad Bar Council
xxxiii	Khyber Pakhtunkhwa Bar Council
xxxiv	Punjab Bar Council
xxxv	Sindh Bar Council
xxxvi	Shaheed Zulifiqar Ali Bhutto Foundation (ZFABF)
xxxvii	Pakistan Sweet Homes Angels & Fairies Place
xxxviii	Sindh Institute of Urology and Transplantation, SIUT Trust and Society for the Welfare of SIUT
xxxix	Shaukat Khanum Memorial Trust
xl	Abdul Sattar Edhi Foundation
xli	Patient’s Aid Foundation
xlii	Indus Hospital and Health Network
xliii	Sundus Foundation
xliv	Ali Zaib Foundation
xlv	Layton Rahmatullah Benevolent Trust (LRBT)
xlvi	Dawat-e-Hadiya, Karachi
xlvii	The Citizens Foundation
xlviii	Make a Wish Foundation
xlix	Saylani Welfare International Trust
l	Dawat-e-Islami Trust
li	Chiniot Anjuman Islamia
liii	Hamdard Laboratories (Waqf) Pakistan
liv	Film and Drama Finance Fund
lv	Shaheed Zulfikar Ali Bhutto Institute of Science and Technology
lvi	Beaconhouse National University
lvii	Federal Ziauddin University
lviii	Punjab Police Welfare Organization, Lahore

Clause 98A:
This clause has been omitted.

Clause 98AA (New Clause):
A new clause is proposed to be added, which exempts from tax any income earned from the ICC Champions Trophy 2025 held in Pakistan. This exemption applies to the ICC Business Corporation (IBC), the International Cricket Council (ICC), their employees, officials, agents, and representatives, as well as ICC member officials, players, coaches, medical staff, IBC partners, and media representatives – excluding residents of Pakistan.

Clause 126E (Amendment Proposed):
It is proposed that tax exemption be granted on income earned by:

• A zone enterprise (as defined under the Special Economic Zones Act, 2012) for 10 years starting from the date the developer certifies the commencement of commercial operations, or until June 30, 2035, whichever comes earlier.
• A zone developer for 10 years, beginning from the date of signing the development agreement for a Special Economic Zone notified by the Federal Government.

Clause 126EA (Amendment to Sub-Clause (b)):
The revised sub-clause proposes tax exemption for zone enterprises (as defined in the Special Technology Zones Authority Act, 2021) for 10 years starting from the date of license issuance by the Special Technology Zone Authority or until June 30, 2035, whichever is earlier.

Clause 145A (Proposed Changes):
The amendment proposes to exempt from tax any income that was not taxable prior to the Constitution (Twenty-fifth Amendment) Act, 2018. This applies to individuals domiciled in, and companies or associations of persons resident in, the Tribal Areas now part of Khyber Pakhtunkhwa and Balochistan (under Article 246(d) of the Constitution), for the period from June 1, 2018, to June 30, 2026 (inclusive).

Clause 151 (Proposed Addition):
A new proviso is proposed, allowing tax exemption on income from cinema operations for five years starting from the date such operations begin.
However, this exemption is capped at either June 30, 2030, or five years from the start of operations, whichever comes first.

Clause 152:
This clause has been omitted.

THE SECOND SCHEDULE
PART-II
Reduction in Tax Rates

Clause 9AC:
This clause has been omitted.

Clause 24CA:
This clause has also been omitted.

New Clause Inserted – Clause 24CB (via Finance Act 2025):
Following the omission of Clause 24CA, a new clause – 24CB – has been introduced.

Under this clause, the National Logistics Corporation (NLC) will be subject to a 3% tax on:

• Payments under clauses (b) and (c) of sub-section (1) of section 153, and
• The gross sale price of lease rights to collect tolls under sub-section (1) of section 236A.

This 3% tax will be considered a minimum tax.
However, if the normal income tax (calculated under Division II of Part I of the First Schedule) on the taxpayer’s taxable income is higher, the NLC will be required to pay the higher (normal) income tax amount.

THE SECOND SCHEDULE
PART-III
Reduction in Tax Liability

Clause 9AC:
This clause has been omitted.

Clause 24CA:
This clause has also been omitted.

New Clause Inserted – Clause 24CB (via Finance Act 2025):
Following the omission of Clause 24CA, a new clause – 24CB – has been introduced.

Under this clause, the National Logistics Corporation (NLC) will be subject to a 3% tax on:

• Payments under clauses (b) and (c) of sub-section (1) of section 153, and
• The gross sale price of lease rights to collect tolls under sub-section (1) of section 236A.

This 3% tax will be considered a minimum tax.
However, if the normal income tax (calculated under Division II of Part I of the First Schedule) on the taxpayer’s taxable income is higher, the NLC will be required to pay the higher (normal) income tax amount.

THE SECOND SCHEDULE
PART-IV
Exemption from Specific Provisions

Omitted Clauses:

• Clauses 12F, 12G, and 12J have been removed.

New Addition to Clause 56:
A new item (xx) has been added under Clause 56, which now allows the import of the following medicines:

• Cystagon
• Cysta Drops
• Trientine Capsules

New Clause 104A (Added via Finance Act 2025):
If you sell a residential property, you won’t be taxed on the capital gains but only if all these conditions are met:

• You’ve personally lived in the property for the last 15 years.
• You’ve declared it in your wealth statement under Section 116 for the past 15 years.
• It is shown as your personal residence in your tax records.

Note: This tax exemption can only be used once every 15 years.

Clause 105A – Audit Exemption:
A person will not be selected for audit under Sections 177 or 214C if they were already selected for audit in any of the past three tax years.

Clause 109A – Withholding Tax Exemption (Tribal Areas):
From June 1, 2018 to June 30, 2026, individuals, companies, and associations of persons who are domiciled or resident in the Tribal Areas (now part of Khyber Pakhtunkhwa and Balochistan) will not be subject to certain withholding tax rules under:

• Division III of Part V of Chapter X
• Chapter XII of the Income Tax Ordinance

Clause 110 – Same Withholding Tax Relief (Tribal Areas):
The same exemption as in Clause 109A is reiterated in Clause 110 – no changes, just confirmation of the relief for the same period and people.

Seventh Schedule
How Banks Calculate Their Profits and the Taxes They Owe

Proposed Changes to Rule 1 of the Seventh Schedule (Taxation of Banking Companies)

1. Leasehold Improvements (New Clause (aa))

If a bank spends money on improving a property it leases or rents, the following rules will apply:

• The cost will be treated as a capital expense and will be amortized at 10% per year.
• Amortization starts from the date the improvements are first used.
• If the lease ends before the amortization period is over:
  • The remaining unamortized amount can be claimed as an expense in the year the lease ends.
  • Any amount received from selling or transferring the improvements will be adjusted.

2. Treatment of Right-of-Use Assets (New Clause (ba))

Even though accounting standards like IFRS 16 require depreciation and finance cost on leased assets:

• Banks won’t be allowed to deduct depreciation or finance costs for these leased (right-of-use) assets.
• Instead, they can deduct the actual rent paid, provided:
  • The bank gets a certificate from its external auditor confirming the rent was actually paid.

Adjustments for prior years:

• If the bank claimed too much in past years (more than actual rent), the excess must be taxed in tax year 2025.
• If it claimed less, the shortfall will be allowed as a deduction in 2025.
• All such adjustments must be certified by the external auditor.

3. Provisioning for Loans (Amendment in Clause (c))

A new rule is being added regarding how banks handle loan loss provisions:

• If provisions for consumer and SME loans are less than 5%, the actual provision amount will be allowed.
• This rule applies retroactively from July 1, 2010.
• Banks must submit a detailed certificate from their external auditor, including:
  • Provision amounts as per SBP Prudential Regulations.
  • Provision amounts under IFRS 9.
  • Disclosures in the bank’s annual accounts.
  • Deductible provisions under relevant clauses of Rule 1.

⚠️ Important:
If the certificate is not submitted or is incomplete at the time of filing the tax return, the deduction will not be allowed for tax year 2025 and onwards.

4. Clarification on Allowable Provisions (New Serial Numbers (iv) & (v))

More clarification has been added to what loan provisions are deductible:

• Only provisions for loans classified as “loss” under SBP Prudential Regulations will be allowed.
• General provisions or others not in line with SBP rules will not be deductible.

5. Standard Format for Auditor’s Certificate (New Clause (fa))

A standard format has been introduced for the auditor’s certificate mentioned above:

CERTIFICATE UNDER RULE 1(C) OF THE SEVENTH SCHEDULE TO THE INCOME TAX ORDINANCE, 2001 FOR TAX YEAR 2025
To:
The Commissioner Inland Revenue, Zone-, Federal Board of Revenue, I, the undersigned statutory auditor of [Name of Banking Company], having conducted the audit of the annual financial statements for the year ended [insert date], in accordance with the applicable auditing standards and the requirements of the Prudential Regulations issued by the State Bank of Pakistan (SBP), the International Financial Reporting Standard (IFRS) 9, and the Seventh Schedule to the Income Tax Ordinance, 2001, hereby certify the following:

Table-1	Category wise Gross Provisions “In Rupees”	Category wise Gross Provisions “In Rupees”	Category wise Gross Provisions “In Rupees”	Category wise Gross Provisions “In Rupees”
Particulars	Allowed Under SBP Prudential Regulations:	Recognized Under IFRS 9:	Disclosed In Annual Accounts	Eligible For Deduction Under Rule 1 (c), 1(d) & 1(e )
Substandard	(xxxx)		(xxxx)	(xxxx)
Doubtful	(xxxx)		(xxxx)	(xxxx)
Loss	(xxxx)		(xxxx)	(xxxx)
General Provision	(xxxx)		(xxxx)	(xxxx)
Specific			(xxxx)	(xxxx)
Stage 1		(xxxx)	(xxxx)	(xxxx)
Stage 2		(xxxx)	(xxxx)	(xxxx)
Stage 3		(xxxx)	(xxxx)	(xxxx)
Others (If any)	(xxxx)	(xxxx)	(xxxx)	(xxxx)
Total	(xxxx)	(xxxx)	(xxxx)	(xxxx)

Table-2	Category wise Reversal against Provisions “In Rupees”	Category wise Reversal against Provisions “In Rupees”	Category wise Reversal against Provisions “In Rupees”	Category wise Reversal against Provisions “In Rupees”
Particulars	Under SBP Prudential Regulations:	Recognized Under IFRS 9:	Disclosed In Annual Accounts	Taxable Under Rule 1 (c), 1(d) & 1(e)
Substandard	(xxxx)		(xxxx)	(xxxx)
Doubtful	(xxxx)		(xxxx)	(xxxx)
Loss	(xxxx)		(xxxx)	(xxxx)
General Provision	(xxxx)		(xxxx)	(xxxx)
Specific			(xxxx)	(xxxx)
Stage 1		(xxxx)	(xxxx)	(xxxx)
Stage 2		(xxxx)	(xxxx)	(xxxx)
Stage 3		(xxxx)	(xxxx)	(xxxx)
Others (if any)	(xxxx)	(xxxx)	(xxxx)	(xxxx)
Total	(xxxx)	(xxxx)	(xxxx)	(xxxx)

We further certify that the above amounts have been derived from and are consistent with:
(i) The relevant provisions of the Prudential Regulations of SBP;
(ii) IFRS 9 and applicable financial reporting frameworks;
(iii) The disclosures made in the audited financial statements of the banking company; and
(iv) The eligibility criteria specified in clause (c), (d) and (e) of Rule 1 of the Seventh Schedule to the Income Tax Ordinance, 2001.
This certificate is issued specifically for the purpose of compliance with the proviso to Rule 1(c) of the Seventh Schedule to the Income Tax Ordinance, 2001, as applicable for the tax year 2025 and onwards.
For and on behalf of [Name of Audit Firm and Signing Partner] Chartered Accountants
Rule (1): It has been proposed to amend clause (g) as follows:
Subject to the aforesaid clauses of rule 1 of this Schedule adjustment made in the annual accounts, on account of the application of International Financial Reporting Standard IFRS-09 (Financial Instruments) or policy or any guidelines or instructions of State Bank of Pakistan in respect of IFRS -09 shall be excluded in arriving at taxable income.

Provided that the provisions of this clause, to the extent of the amendments made herein, shall apply in respect of the tax year 2025 and onwards.
[Explanation.─ For removal of doubt, it is clarified that nothing in this clause shall be so construed as to allow a notional loss, or charge to tax any notional gain on any investment under any regulation or instruction unless all the events that determine such gain or loss have occurred and the gain or loss can be determined with reasonable accuracy.]

THE TENTH SCHEDULE
Rules for Persons not Appearing in the Active Taxpayers’ List

The following changes have been proposed in the 2nd provison of rule (1):

S. No.	Fair Market Value of Immovable Property	Tax Rate	Tax Rate
–	–	2024-25	2025-26
(1)	(2)	(3)	(4)
1	Where the fair market value does not exceed Rs. 50 million	12%	10.5%
2	Where the fair market value exceeds Rs. 50 million but does not exceed Rs. 100 million	16%	14.5%
3	Where the fair market value exceeds Rs. 100 million	20%	18.5%

The following changes have been proposed in the 3rd proviso of rule (1):

S. No.	Section	Description	Tax Rate	Tax Rate
–	–	–	2024-25	2025-26
(1)	(2)	(3)	(4)	(5)
1	Section 151	On yield or profit on debt	35%	Omitted
2	Section 236C	On the gross amount of consideration received on sale or transfer of immovable property	10%	11.5%
3	Section 236G	On the gross amount of sale to distributors, dealers or wholesalers other than sale of fertilizer.	2%	2%
4	Section 236H	On the gross amount of sale to retailers	2.5%	2.5%

The following changes have been proposed in clause (a) of rule (1A):

S. No.	Gross Amount of Consideration Received	Tax Rate	Tax Rate
–	–	2024-25	2025-26
(1)	(2)	(3)	(4)
1	Where the gross amount of consideration received does not exceed Rs. 50 million	6%	7.5%
2	Where the gross amount of consideration received exceeds Rs. 50 million but does not exceed Rs. 100 million	7%	8.5%
3	Where the gross amount of consideration received exceeds Rs. 100 million	8%	9.5%

The following changes have been proposed in clause (b) of rule (1A):

S. No.	Fair Market Value of Immovable Property	Tax Rate	Tax Rate
–	–	2024-25	2025-26
(1)	(2)	(3)	(4)
1	Where the fair market value does not exceed Rs. 50 million	6%	4.5%
2	Where the fair market value exceeds Rs. 50 million but does not exceed Rs. 100 million	7%	5.5%
3	Where the fair market value exceeds Rs. 100 million	8%	6.5%

After Fourteenth Schedule, the following new schedule has been inserted vide FA 2025 as follows:

THE FIFTEENTH SCHEDULE
[SEE SECTION 114C]

THRESHOLD FOR ECONOMIC TRANSACTIONS
For the purposes of section 114C of the Ordinance, the threshold of the economic transactions specified herein, to be applied in respect of ineligible persons shall be determined as follows:

#	Transaction Reference	Description	Transaction Value Specification	Threshold limitation for ineligibility
1	114C(1)(a)	In relation to an application for booking, purchase or registration of motor vehicle.	The invoice value for locally manufactured vehicle; or the import value as assessed by the Customs Authority inclusive of all applicable taxes, duties, levies and charge.	Exceeding 7 million Rupees
2	114C(1)(b)	In relation to an application for registering, recording or attesting transfer of any immoveable property	Fair Market Value as defined in clause (22AA) of section 2 of the Ordinance	Exceeding 100 million Rupees
3	114C(1)(c)	In relation to the investment in securities, debt securities, units of mutual funds or money market instruments subject to the condition that the investment	Acquisition cost of securities or debt securities or unit of mutual funds or money market instruments	Exceeding 50 million Rupees
4	114C(1)(d)	Annual cash withdrawal limit	–	100 million rupees in all bank accounts held by an individual