Business & AOP Income Tax Calculator
Work out income tax on business profits for a sole proprietor, non-salaried individual or Association of Persons. Enter your revenue and expenses, and see how the result compares with being taxed on the same amount as salary.
Rates verified 2026-10-10 against the Finance Act 2026 for Tax Year 2027 (1 July 2026 - 30 June 2027).
Implements section 18 of the Income Tax Ordinance, 2001.
Rs 50 lakh
Total receipts before expenses.
Rs 15 lakh
Rent, salaries, utilities, depreciation and other deductible costs.
Taxable income
Rs 35,00,000
⚡ Calculations update automatically as you type
Total tax due
Rs 7,70,000
Income after tax
Rs 27,30,000
- Effective rate
- 22%
- Marginal rate
- 40%
- Monthly equivalent
- Rs 64,167
Your tax, slab by slab
| Income slab | Rate | Your income here | Tax |
|---|---|---|---|
| 0 – 6,00,000 | 0% | Rs 6,00,000 | Rs 0 |
| 6,00,000 – 12,00,000 | 15% | Rs 6,00,000 | Rs 90,000 |
| 12,00,000 – 16,00,000 | 20% | Rs 4,00,000 | Rs 80,000 |
| 16,00,000 – 32,00,000 | 30% | Rs 16,00,000 | Rs 4,80,000 |
| 32,00,000 – 56,00,000 | 40% | Rs 3,00,000 | Rs 1,20,000 |
| Total income tax | Rs 7,70,000 | ||
The same income as a salary
If Rs 35,00,000 were salary rather than business income, the tax would be Rs 3,91,000 instead of Rs 7,70,000, representing a difference of Rs 3,79,000. Pakistan taxes business income considerably harder than employment income at almost every bracket.
Sole Proprietor vs Company Structure Comparison
Compare sole proprietor progressive slabs with SECP corporate tax rates on the same profit.
Progressive slabs up to 45% + 10% surcharge if > Rs 10m.
Flat 20% corporate tax rate for eligible small companies.
Flat 29% corporate income tax rate.
Share Anonymous Tax Breakdown
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Bilingual Tax Glossary(ٹیکس کی بنیادی اصطلاحات)
Quick guide to standard Pakistani tax terms in Urdu and English.
This is an estimate for general information, not professional tax advice. It does not account for every allowance, exemption or provincial levy that may apply to you. Confirm your position with the FBR or a qualified tax practitioner before acting on it.
Frequently asked questions
- What are the business tax rates in Pakistan for Tax Year 2027?
- Non-salaried individuals and AOPs are taxed on 6 slabs. Income up to Rs 6,00,000 is exempt, then rates run from 15% up to a top rate of 45% on income above Rs 56,00,000.
- Why do I pay so much more than a salaried person?
- Because the scales are genuinely different. On the slab just above the exemption a salaried person pays 1% while a business pays 15%. On taxable income of Rs 12,00,000 that is Rs 6,000 versus Rs 90,000. The rationale is that salaries are already fully documented and withheld at source, so the salaried scale is treated as a concession.
- What is an AOP?
- An Association of Persons is the Ordinance's term for a partnership or similar unincorporated joint venture. AOPs are taxed as a single entity on the same rate table as non-salaried individuals, and the partners are not then taxed again on their share of the profit. Professional AOPs that are prohibited by law from incorporating face a capped top rate of 40%.
- Is there a surcharge on business income?
- Yes. A surcharge of 10% of your income tax applies where taxable income exceeds Rs 1,00,00,000. This survived the Finance Act 2026, even though the equivalent 9% charge on salaried individuals was abolished.
- Should I incorporate instead?
- It depends on your profit level and how much you need to withdraw. A private limited company pays corporate tax on its profits and then tax again on dividends when you take money out, so the combined burden is not automatically lower — but a company has advantages in limited liability, credibility and retained earnings. This is a genuine planning question worth putting to an accountant rather than deciding from a calculator.
- What expenses can I deduct?
- Expenditure wholly and exclusively incurred for the purposes of the business: rent, staff salaries, utilities, professional fees, depreciation on business assets, financing costs and similar. Personal drawings are not deductible. Keep documentation, because undocumented expenses are routinely disallowed on audit.
How business income is taxed
Business income is taxed on net profit — gross revenue less allowable expenses — using the non-salaried rate table in the First Schedule. Unlike the salaried scale, which starts at a token 1%, the non-salaried scale opens at 15% and climbs steeply.
The gap with salaried rates is large
This is the point most business owners discover too late. The two scales diverge immediately above the shared Rs 6,00,000 exemption, and by the middle of the range a business owner is paying several times what an employee on the same income would pay. The calculator shows that comparison directly so you can see where you sit.
One practical consequence: if you run a company and also draw a salary from it, how you split profit between salary and dividend has a material effect on your total burden. That is worth modelling properly with an accountant.
Minimum tax and other charges
This calculator covers the ordinary slab computation and the 10% surcharge. It does not model minimum tax on turnover under section 113, which can apply to loss-making or low-margin businesses and may exceed the slab figure, nor the various sector-specific regimes. If your margins are thin, check your section 113 position as well.
Provincial taxes are not included
Provincial sales tax on services (Punjab, Sindh, KP and Balochistan each run their own), professional tax and property tax are separate from federal income tax and are not calculated here. For a services business these can be substantial, so budget for them independently.