In 2026-27 a shopkeeper, doctor, contractor or AOP pays no tax on the first Rs 600,000 of taxable income, then 15% to 45% in six slabs. A business profit of Rs 3 million, for example, owes Rs 590,000. Salaried people pay much less on the same income, and the lower table applies only when salary is more than 75% of taxable income.
Enter your net profit for the year, any salary and other income. The calculator picks the right table, adds the surcharge above Rs 10 million, checks minimum tax if your turnover is Rs 100 million or more, and shows what is left to pay after tax already deducted.
Business income tax slabs 2026-27
Tax year 2027, 1 July 2026 to 30 June 2027. These are the rates of clause 1, Division I, Part I of the First Schedule for individuals and associations of persons (AOPs).
| Taxable income a year | Tax |
|---|---|
| Up to Rs 600,000 | Nil |
| Rs 600,001 to Rs 1,200,000 | 15% of the amount above Rs 600,000 |
| Rs 1,200,001 to Rs 1,600,000 | Rs 90,000 + 20% of the amount above Rs 1,200,000 |
| Rs 1,600,001 to Rs 3,200,000 | Rs 170,000 + 30% of the amount above Rs 1,600,000 |
| Rs 3,200,001 to Rs 5,600,000 | Rs 650,000 + 40% of the amount above Rs 3,200,000 |
| Above Rs 5,600,000 | Rs 1,610,000 + 45% (40% for a professional firm) of the amount above Rs 5,600,000 |
The Finance Act 2026 left this table as it was in 2025-26. The 40% top rate is for an AOP that is a professional firm barred from becoming a company by law or by its professional body, such as a firm of chartered accountants or lawyers.
How tax on business income is worked out
- Find taxable income. Add business profit (receipts less allowable expenses and tax depreciation), salary and any other income taxed at normal rates. Rent, dividends, profit on debt and capital gains have their own rates and stay out.
- Choose the table. If salary is more than 75% of taxable income, the salaried slabs apply to the whole income. Otherwise the business slabs above apply to the whole income, salary included.
- Apply the slab. Fixed tax for the slab plus the slab rate on the amount above its lower limit.
- Add the surcharge. Where taxable income is over Rs 10 million, section 4AB adds 10% of the tax for business individuals and AOPs.
- Check minimum tax. With turnover of Rs 100 million or more, compare 1.25% of turnover with the tax on the business income and pay the higher.
- Deduct tax already paid. Adjustable withholding tax and advance tax instalments come off the total.
Worked example: a shop with Rs 3 million profit
Taxable income Rs 3,000,000 falls in the Rs 1,600,001 to Rs 3,200,000 slab.
- Fixed tax: Rs 170,000
- 30% of (3,000,000 − 1,600,000) = Rs 420,000
- Tax: Rs 590,000, about Rs 49,167 a month and 19.67% of income
A salaried person with the same Rs 3,000,000 would pay Rs 276,000 in 2026-27.
Business tax against salaried tax, 2026-27
Yearly tax on the same taxable income under each table, with the surcharge where income is over Rs 10 million.
| Taxable income | Business or AOP | Salaried | Extra for business income |
|---|---|---|---|
| Rs 1,000,000 | Rs 60,000 | Rs 4,000 | Rs 56,000 |
| Rs 1,500,000 | Rs 150,000 | Rs 39,000 | Rs 111,000 |
| Rs 2,400,000 | Rs 410,000 | Rs 156,000 | Rs 254,000 |
| Rs 3,600,000 | Rs 810,000 | Rs 416,000 | Rs 394,000 |
| Rs 6,000,000 | Rs 1,790,000 | Rs 1,104,000 | Rs 686,000 |
| Rs 12,000,000 | Rs 4,939,000 | Rs 3,174,000 | Rs 1,765,000 |
Salary and business income together: the 75% rule
Pakistan does not tax salary and business income separately. The whole taxable income goes through one table, and the salary share decides which.
Worked example
A teacher earns a salary of Rs 1,800,000 and makes Rs 900,000 from tuition classes run as a business. Taxable income is Rs 2,700,000 and salary is 66.7% of it, which is not more than 75%.
- Business table: Rs 170,000 + 30% of Rs 1,100,000 = Rs 500,000
- If salary had been over 75%, the salaried table would give Rs 216,000
The line is sharp. At exactly 75% the business table still applies; one rupee more of salary share switches to the salaried table.
Rs 3 million split between salary and business
Same total income, different salary shares, tax year 2027.
| Salary | Business income | Table used | Tax 2026-27 |
|---|---|---|---|
| Rs 3,000,000 | Rs 0 | Salaried | Rs 276,000 |
| Rs 2,400,000 | Rs 600,000 | Salaried | Rs 276,000 |
| Rs 2,280,000 | Rs 720,000 | Salaried | Rs 276,000 |
| Rs 2,250,000 | Rs 750,000 | Business | Rs 590,000 |
| Rs 1,500,000 | Rs 1,500,000 | Business | Rs 590,000 |
| Rs 0 | Rs 3,000,000 | Business | Rs 590,000 |
Minimum tax on turnover
Section 113 sets a floor for individuals and AOPs whose turnover is Rs 100 million or more in the year. The general rate is 1.25% of turnover; some sectors such as petroleum dealers, rice mills and FMCG distributors have lower rates.
A wholesaler with turnover of Rs 250 million and a net profit of Rs 4 million would owe Rs 970,000 at normal rates. Minimum tax is 1.25% × 250,000,000 = Rs 3,125,000, so that is the tax payable. The excess over normal tax can be carried forward and adjusted against tax in the next three years.
Where you also have salary or other income, the calculator compares minimum tax with the share of normal tax that falls on business income, in proportion to the income.
Business income tax slabs 2025-26
Tax year 2026, 1 July 2025 to 30 June 2026. Same table as 2026-27, with the same 10% surcharge above Rs 10 million.
| Taxable income a year | Tax |
|---|---|
| Up to Rs 600,000 | Nil |
| Rs 600,001 to Rs 1,200,000 | 15% of the amount above Rs 600,000 |
| Rs 1,200,001 to Rs 1,600,000 | Rs 90,000 + 20% of the amount above Rs 1,200,000 |
| Rs 1,600,001 to Rs 3,200,000 | Rs 170,000 + 30% of the amount above Rs 1,600,000 |
| Rs 3,200,001 to Rs 5,600,000 | Rs 650,000 + 40% of the amount above Rs 3,200,000 |
| Above Rs 5,600,000 | Rs 1,610,000 + 45% (40% for a professional firm) of the amount above Rs 5,600,000 |
Super tax under section 4C does not reach individuals or AOPs with income of Rs 500 million or less in 2026-27. For larger incomes and for 2025-26, use the super tax calculator. Freelancers paid from abroad through banks can be taxed at a lower final rate; see the freelancer tax calculator.
Questions people ask
What is the income tax rate on business income in Pakistan for 2026-27?
Nil up to Rs 600,000, then 15%, 20%, 30%, 40% and 45% in slabs, with the top rate starting above Rs 5.6 million. The rates apply to net profit plus other normal income for individuals and AOPs. A professional firm AOP pays 40% instead of 45% in the top slab.
Is tax on business income different from salary tax?
Yes. Salaried people use a lower table that starts at 1% and reaches 35%, while business income starts at 15% and reaches 45%. On Rs 3 million, business tax is Rs 590,000 and salaried tax is Rs 276,000 in 2026-27. The salaried table applies only when salary is more than 75% of taxable income.
How do I calculate tax if I have a job and a business?
Add salary, business profit and other normal income. Divide salary by the total. If the result is above 75%, the whole income goes through the salaried slabs; if it is 75% or less, the whole income goes through the business slabs. Then deduct tax already withheld from your salary and business receipts.
Does the surcharge apply to business income in 2026-27?
Yes. The Finance Act 2026 removed the surcharge only for salaried individuals. Business individuals and AOPs with taxable income over Rs 10 million still add 10% of their tax under section 4AB.
When does minimum tax apply to a sole trader?
When turnover in the tax year is Rs 100 million or more. Tax is then the higher of normal tax on business income and 1.25% of turnover, or the lower sector rate where one applies. Below Rs 100 million of turnover there is no minimum tax on an individual or AOP.
Last reviewed 30 September 2026. Results are estimates; official notices always take precedence.