Islamabad, August 23, 2025 – The Federal Board of Revenue (FBR) has officially determined your income benchmark for the tax year 2025-26, marking a crucial step toward defining who pays what in Pakistan’s evolving tax landscape. And yes, it directly impacts your wallet!
What Has Changed?
Under the updated Income Tax Ordinance, 2001, income will be calculated based on your total earnings across all heads – salary, property, business, capital gains, and other sources. But here’s the twist: deductions, exemptions, and losses are also factored in, which means your income might not be as taxable as you think.
Heads of Income – Where Do You Stand?
| Head of Income | What It Covers |
| Salary | Monthly/annual earnings from employment |
| Property | Rental or leasing revenue |
| Business | Profits from commercial activities |
| Capital Gains | Profits from selling assets like shares or property |
| Other Sources | Dividends, interest, royalties, and more |
Why Should You Care?
Because the amount of tax you pay – or the refund you might claim – depends on how your income is classified and computed. Salaried individuals could see different deductions compared to business owners, while investors with capital gains might benefit from strategic exemptions.
Resident vs Non-Resident – Big Difference
Residents: Taxed on both Pakistan-source and foreign-source income.
Non-Residents: Only Pakistan-source income is counted.
What Should You Do Now?
Track All Sources of Income – No hidden earnings; the FBR is tightening audits.
Review Deductible Allowances – From medical expenses to charitable donations, every rupee counts.
Plan Ahead – Smart investments can reduce taxable amounts significantly.
The Bigger Picture
With the 2027 fiscal roadmap in sight, FBR’s latest move signals tighter compliance, broader audits, and potential incentives for taxpayers who declare correctly. Are you ready for the tax season?