FBR Pakistan Tax Return Questions & Answers | Humayun Atif

FBR Pakistan Tax Return Questions & Answers

The Federal Board of Revenue (FBR) is the central tax authority in Pakistan responsible for collecting federal taxes and implementing tax laws. FBR helps the government to meet its fiscal targets and budgetary needs.

The Income Tax Ordinance, 2001, with all the updates, is the primary legislation governing income tax for individuals, companies, and other entities in Pakistan. It outlines tax rates, assessment procedures, filing requirements, penalties, and mechanisms for dispute resolution related to income tax.

The Federal Board of Revenue (FBR) website provides official texts of all tax rules, amendments, and notifications related to income tax, sales tax, excise, and customs regulations, and can be viewed here:

https://www.fbr.gov.pk/

This blog is presented in a simple question-and-answer format to make tax return information easy to understand. Our goal is to help you file accurately and responsibly by keeping things clear and smart, and please comment and ask questions if any.

FBR Maloomat

Question 1: How can I find information about taxes paid or tax deducted at source during the year on the FBR Pakistan Tax Portal?

Answer:
You can access details of taxes paid and deducted at source through the FBR Tax Portal by using the ‘FBR Maloomat’ section, which provides pre-filled data to assist with filing your income tax return. Additionally, you can explore the ‘MIS‘ tab located in the top-right menu of your IRIS dashboard, where more detailed transaction and tax deduction information is available for review and download.

FBR Maloomat is a dedicated feature within the IRIS portal that offers taxpayers a summary of their financial and transactional information, as reported by third-party sources such as banks, property registration authorities, motor vehicle departments, airlines, and utility providers. This data is linked to the taxpayer’s CNIC or NTN and includes key details such as property purchases (Section 236K), property sales (Section 236C), vehicle acquisitions, bank activity, foreign travel, and utility expenses. Available under the “Maloomat” tab, this tool helps taxpayers verify and reconcile their declared income and assets with information gathered by FBR, enhancing transparency and ensuring more accurate and compliant return filing.

Tip: Always download these files in Excel format and compare them with your own records of taxes paid to ensure that your tax return is complete and accurate.

Salaries and Allowances

Question 2: How are salaries and allowances treated and taxed in the FBR tax return?

Answer:
Salary income is taxed based on the slab rates prescribed by the FBR for each tax year. For Tax Years 2024–25 and 2025–26, no tax is applicable on an annual salary income up to PKR 600,000. Any income above this threshold is taxed according to the applicable progressive slab rates issued by the FBR. Allowances that are fully or partially exempt are treated accordingly, while taxable allowances are included in total salary income.

Key tax treatment of salary components:

• Basic salary, wages, overtime, bonuses, commissions, and leave encashment are fully taxable.
• Medical allowance (if not reimbursed) is exempt up to 10% of the basic salary.

Further details regarding salary income and allowances are provided in Sections 12, 13, and 39 of the Income Tax Ordinance, 2001.

How to Report in FBR Pakistan Tax Return (IRIS Portal)

• Salary Income → Report under Tax Code 1009 in the Salary section.
• Tax Deducted at Source (by employer) → Report under Tax Code 64020004.
• In the Wealth Statement, declare the total salary received under Code 7031.

 Salary and other Incomes combination

Question 3: How do I file my FBR tax return if I have salary income along with income from other sources?

Answer:
If you have income from multiple sources, your tax treatment depends on the composition of your total income:

• If at least 75% of your total income comes from salary, then your income will be taxed under the salary income slab rates.
• If less than 75% of your income is from salary, then your income will be taxed under the respective heads of income (e.g., business income, property income, etc.), and each source will be assessed according to its applicable tax rules.

In either case, you must accurately declare all sources of income in your FBR tax return through the IRIS portal, ensuring each is entered under its relevant section.

Dividend Income and Stock Market & PMEX

Question 4: How should I report investments in PSX shares, PMEX commodities, and dividends in my FBR tax return?

Answer:
Dividends are a portion of a company’s profits distributed to its shareholders, usually in the form of cash or additional shares. In Pakistan, dividends are typically received from investments in companies listed on the Pakistan Stock Exchange (PSX) and profits from certain instruments traded on the Pakistan Mercantile Exchange (PMEX).

• Under Pakistan’s tax laws, dividends are generally subject to withholding tax and are treated as a Final Tax Regime (FTR) in most cases.
• For filers, the applicable withholding tax rate is 15%.
• It is important to obtain and review your withholding tax certificate (WHT) from your broker or the company.
• If you receive dividends from multiple companies, report them individually on your tax return.
• You can also get this information from FBR Maloomat for cross-check.

How to Report in FBR Pakistan Tax Return (IRIS Portal)

• Dividend income and the corresponding tax deducted are reported under Tax Code 64030055 in the “Fixed/Final Tax” section of the FBR tax return.
• The total value of the investment (e.g., shares held in PSX or units in PMEX) should be declared in the Wealth Statement under Asset Code 7013.

Profits on Savings bank Accounts – Profit on Debts

Question 5: How do I report profits from savings bank accounts in the FBR tax return?

Answer:
Profit on debt includes earnings such as interest on savings bank accounts and deposits, profit on government securities, and interest on corporate bonds and debentures.

Key points to note:

• From July 1, 2025, the tax rate on profit earned from deposits with banks, financial institutions, and investments in government securities has increased from 15% to 20%.
• If the total profit on debt exceeds PKR 5 million in a tax year, it will be taxed as normal income, meaning the applicable business or income slab rates will apply.
• Tax withheld at source on profit on debt is final; therefore, no additional tax is payable, nor can a refund be claimed.
• If your profit on debt is below PKR 5 million, you should report it using Tax Code 64040052 in your FBR tax return.
• The total value of profits should be declared in the reconciliation in Wealth Statement under Asset Code 7033.

Reporting of Bank Balances in Wealth Statement

Question 6: How do I disclose bank balances in the FBR Wealth Statement?

Answer:
All bank balances must be declared in the Wealth Statement of your FBR tax return. Only the balances as of the last day of the tax year should be reported. The disclosure must include the following details for each account:

• Bank name
• Branch and location
• Nature of the account (e.g., savings or current)
• IBAN or Account number

Providing complete and accurate information helps ensure compliance and facilitates verification if needed.

FBR wealth statement code for closing balances of banks: 7006

Deemed Income Tax under Section 7E – Capital Assets

Question 7: What is Deemed Income Tax under Section 7E, and how is it disclosed in the FBR Tax Return?

Answer:
Deemed Income Tax under Section 7E applies to individuals who own immovable property, such as plots, houses, or commercial buildings, but do not actually receive rental income from these properties.

Under this provision, effective from Tax Year 2022 onwards, the FBR assumes that the property owner earns a notional (deemed) rental income, regardless of whether the property is rented out or vacant, and taxes this deemed income accordingly.

In addition to reporting your capital assets in the Wealth Statement as before, you are now also required to disclose your assets under Section 7E in the ‘Capital Assets’ section of your tax return with more details, and the FBR tax return code is 7102.

Tip: Ensure that the information reported under the ‘Capital Assets’ section of your return is accurate. When selling property, a 7E Tax Certificate is required. Without it, you may need to revise your return or face an additional 1% tax.

There are several exemptions available under Section 7E, which can help reduce or eliminate the tax liability on deemed rental income. You should review these exemptions carefully to optimize your tax position here: https://accountingblogger.com/tax-on-deemed-income-fbr-pakistan/

Tax On Deemed Income – FBR Pakistan | Humayun Atif (CMA )

Joint Ownership of Property

Question 8: My brother and I jointly own a property. How should we report its rental income and value in the FBR tax return and Wealth Statement?

Answer:
Under Section 66 of the Income Tax Ordinance, the treatment of jointly owned property is as follows:

1. Rental income from the property is divided among the co-owners in proportion to their ownership share.
2. For tax purposes, each co-owner is treated as the individual owner of their respective share.
3. The income is not assessed as an AOP (Association of Persons) unless:
   • The joint ownership is being used to conduct a business, or
   • There is a clear intention to form and act as an AOP.

Therefore, in your FBR tax return and Wealth Statement, you should:

• Report only your share of the rental income under the relevant income head.
• Declare your share of the property’s value in the Wealth Statement.
• Clearly mention the property details, including address, type (e.g. residential, commercial), and your ownership ratio.

This ensures accurate reporting and compliance while avoiding unnecessary tax complications.

FBR wealth statement code for Real estate: 7002 and also include in the Capital Assets sections of the return in code 7102 with cost and fair market value.

Tax deducted at the time of purchase of a property u/s 236K

Question 9: Why is tax deducted at the time of purchase of a property u/s 236K and how to treat it in FBR Return?

Answer:

Section 236K of the Income Tax Ordinance mandates the collection of advance tax from property buyers at the time of purchase or registration of immovable property. This measure enables the Federal Board of Revenue (FBR) to better regulate real estate transactions and expand the tax net. The provision applies to all categories of immovable property, including residential plots, commercial units, and agricultural land, regardless of the property’s value.

• Overseas Pakistanis who hold a Pakistan Origin Card (POC) or a National Identity Card for Overseas Pakistanis (NICOP), and who qualify as non-residents (i.e., residing in Pakistan for fewer than 183 days during the tax year), are permitted to pay tax at the filer rate, even if they are not listed as active taxpayers.

How to Report in FBR Pakistan Tax Return (IRIS Portal)

• In the income tax return, you can show tax collected under Section 236K in code 64151101.
• This is an adjustable tax, and if your liability is less than you can also claim a refund.

Tax deducted at the time of the Sale of a property u/s 236C

Question 10: Why is tax deducted at the time of sale of a property u/s 236C and how to treat it in FBR Return?

Answer:

Section 236C of the Income Tax Ordinance, 2001 (Pakistan) pertains to the collection of advance tax on the sale or transfer of immovable property. Under this provision, the seller (transferor) is required to pay advance tax at the time the property is sold or transferred.

• Similar to Section 236K, non-resident Pakistanis who hold a NICOP or Pakistan Origin Card (POC) and have spent fewer than 183 days in Pakistan during the relevant tax year may be eligible to pay tax at filer rates, even if they are not listed as active taxpayers in the FBR’s Active Taxpayers List.

How to Report in FBR Pakistan Tax Return (IRIS Portal)

• In the income tax return, you can show tax collected under Section 236C in code 64150301.
• This is an adjustable tax, and if your liability is less than you can also claim a refund.

Tax deducted on Mobile/Internet

Question 11: Is the tax deducted from my mobile and internet bills refundable? How should I report it in the FBR tax return?

Answer:
Yes, the tax deducted from your mobile and internet bills is considered as a adjustable tax.

Telecom companies and internet service providers deduct 15% advance tax from all users. This amount is adjustable against your total income tax liability for the year.

In your FBR tax return, you should:

• Declare the total tax deducted under the relevant section for adjustable tax collected under code 64150005.
  • You can use this amount to reduce your total tax payables.

Be sure to verify the deducted amount using your FBR Maloomat data or monthly mobile/internet bills, or get a tax certificate from the service provider.

Tax deducted from Domestic Electricity bills

Question 12: Tax deducted from my domestic electricity bill claimable? How to treat it in FBR Return?

Answer:

• As per Section 235 of the Income Tax Ordinance, tax deducted on domestic electricity bills is considered as adjustable tax.
• If your monthly electricity bill is Rs. 25,000 or more, then the tax deducted by the electricity service provider becomes adjustable.
• You can claim this tax under tax credit code #64140101 while filing your income tax return.
• The rate of tax deduction is 7.5%. For example, if your annual electricity bills total Rs. 400,000, the deducted tax would be Rs. 30,000 (i.e., 7.5%), which is claimable.

 Token Tax paid for a Motor Vehicle u/s 234

Question 13: Can the tax paid under Section 234 at the time of paying vehicle token tax be claimed in the income tax return?

Answer:

The annual token tax is a vehicle tax paid to the Excise and Taxation Department of your respective province (e.g., Punjab, Sindh) for owning and using a vehicle. It is usually paid once a year, and the amount depends on the vehicle’s engine capacity, type, and province.

If the token tax receipt includes an income tax component, you can claim that portion as an adjustable tax in your income tax return under the relevant adjustable tax code 64130003.

Additionally, the full amount of the token payment, excluding the tax portion, can be entered under “Motor Vehicle Expenses” in the expenses claimed section of your Wealth Statement.

However, it can be claimed if:

• The payment receipt clearly shows the income tax amount deducted under Section 234.
• The vehicle is declared in your Wealth Statement as an asset.

Make sure to enter the tax amount in the adjustable tax section of your return under the appropriate tax credit code.

Advance Tax Collection on Air Tickets u/s 236L & 236B

Question 14: Is the tax paid at the time of purchasing air tickets is claimable in the FBR tax return?

Answer:
Previously, under Sections 236L and 236B of the Income Tax Ordinance, 2001, airlines were required to collect advance tax on the gross amount of international and domestic air tickets at the time of purchase. Taxpayers could then claim the deducted amount in their returns under code 64150201.

However, these sections were omitted through the Finance Act, 2021, effective from 1st July 2021. As a result, the related tax fields have been removed from the FBR return forms and no longer exist in the FBR tax return form.

Taxation on Bahbood Savings Certificates

Question 15: How are profits from Bahbood Savings Certificates treated for tax purposes, and how should the investment be reported in the FBR wealth statement?

Answer:
Bahbood Savings Certificates (BSC) are savings instruments introduced by the Government of Pakistan to provide financial support to senior citizens, widows, and individuals with disabilities. These certificates offer a secure investment option with attractive profit rates and certain tax advantages. Furthermore, Investments are not subject to Zakat deductions.

According to Part III of the Second Schedule of the Income Tax Ordinance, the tax payable on profit earned from investment in Bahbood Savings Certificates, Pensioners’ Benefit Accounts, and Shuhada Family Welfare Accounts is capped at a maximum of 5% of the profit amount.

Please note that profit is exempt up to Rs. 600,000. However, if the total profit exceeds this threshold, the entire amount becomes taxable at the rate of 5% per annum.

It is important to note that the National Savings Centre does not deduct tax at source on the profit earned from Bahbood Savings Certificates. Instead, the applicable tax must be paid by the investor when filing their annual income tax return.

To report the investment in your tax return:

• Declare the profit under the head of “Income from Other Sources.” and system will calculate tax.
• Mention the Bahbood profit in code 5003041, and investment amount in your wealth statement in code 7006 with income in code 7031.
• Always keep all documentation such as profit statements, account details in case it’s needed for verification.

Taxation on Digital Premium Prize Bonds issued by SBP

Question 16: How are profits from Premium Bonds issued by SBP treated for tax purposes, and how should the investment be reported in the FBR tax return?

Answer:
Premium Prize Bonds are government-backed investment instruments issued by the State Bank of Pakistan (SBP) and are available for purchase through designated branches of commercial banks. These bonds offer a combination of secure, fixed-income returns and lottery-based prize incentives, making them a unique savings option.

A withholding tax of 15% is deducted at source on the profit earned, which constitutes the final tax liability, meaning no further tax is payable on this income. Furthermore, Investments are not subject to Zakat deductions.

Tax on these bonds is deducted u/s 151(1)(a) for filers @ 15% as a final tax liability and shown in the Final tax section of the return in code 64040051.

FBR Taxation on Pension Income

Question 17: Is pension income taxable under FBR rules in Pakistan? How to treat it in FBR Return?

Answer:

According to Section 12(2)(f) of the Income Tax Ordinance, 2001, pension income is now subject to taxation under the following conditions:

• A final tax of 5% will be levied on annual pension income exceeding Rs. 10 million, where the pensioner is below 70 years of age.
• No tax shall apply if the pensioner is 70 years of age or older, or if the annual pension does not exceed Rs. 10 million.
• Tax return code: 5007

Zakat in FBR Return

Question 18: How can Zakat payments be claimed in the FBR income tax return?

Answer:

Zakat is fully exempt from income tax in Pakistan, and more precisely, it is treated as a deductible allowance under the Income Tax Ordinance, 2001, under Section 60.

• Zakat must be actually paid.
• Zakat deducted automatically from a bank account (on savings exceeding Nisab) is also deductible.

• Make sure to keep the Zakat certificate/receipt for record and verification as this will reduce your taxable income and overall tax liability.
• You can place your zakat u/s 60 in the FBR return code 9001.

FBR Pakistan Taxation on Foreign Remittances

Question 19: What is foreign remittance, and how is it taxed in Pakistan?

Answer:

In Pakistan, foreign remittance refers to funds transferred into the country from abroad, typically by overseas Pakistanis to support family members or for investment purposes.

As per Section 111(4) of the Income Tax Ordinance, 2001:

• Foreign remittances are exempt from income tax if received through official banking channels, such as wire transfers, licensed remittance services (e.g., Western Union), or Roshan Digital Accounts.
• The remitted amount must be encashed in Pakistani Rupees via a scheduled bank.
• No explanation of the source of income is required, and no tax is applicable, provided that the remittance is properly documented and does not exceed Rs. 5 million in a tax year.
• Remittances exceeding PKR 5 million may invite additional scrutiny for AML (Anti-Money Laundering) compliance.
• Foreign Remittances are shown is wealth statement reconciliation in code: 7035

Please note that foreign remittances should be declared by the filer who receives them in their bank account and must be reported in the Wealth Statement under the relevant head for foreign remittances.

FBR Pakistan Taxation on Agricultural Income

Question 20: Is agricultural income exempt from tax, or it is taxable in Pakistan?

Answer:

One significant feature of Pakistan’s tax framework is the exemption of agricultural income from federal income tax under Section 41 of the Income Tax Ordinance. This provision ensures that income derived exclusively from agricultural activities is not subject to taxation by the Federal Board of Revenue (FBR).

Despite the federal exemption, agricultural income is not entirely free from taxation. Taxation authority over agricultural income lies with the provinces, and each province imposes its own set of land taxes. These taxes are generally calculated based on factors such as the size of the landholding, the type of crops cultivated, and the availability of irrigation.

However, it must still be declared in your FBR income tax return under the “Agriculture Income” section code 6100.

Question 21: Is agricultural income taxable at the provincial level in Pakistan?

Answer:

Yes, agricultural income is exempt from federal income tax under the Income Tax Ordinance, 2001, but it is subject to taxation under provincial agricultural income tax laws, which vary by province.

For individuals in Punjab, the relevant authority for agricultural income tax is the Punjab Board of Revenue.
It is important to maintain proper records of land ownership and agricultural income for verification purposes by the provincial tax authorities.

Export of Services u/s 154A – Treatment of Freelancer Income in FBR Return

Question 22:  What is the treatment of freelancer income in the FBR tax return, and how is it taxed?

Answer:

Freelancer income earned from providing digital or IT-enabled services to foreign clients, such as software development, content writing, graphic design, IT consultancy, etc. qualifies as Export of Services under Section 154A of the Income Tax Ordinance, 2001.

This income falls under the Final Tax Regime (FTR) and is taxed as follows:

Applicable Tax Rates:

• 1% – For individuals who are filers (on the Active Taxpayers List) and earning export income from services.
• 0.25% – For filers who are registered with the Pakistan Software Export Board (PSEB) and provide approved IT or IT-enabled services.

Please note that:

• Tax deducted under Section 154A is treated as final tax liability, and usually no further tax is due on that income.
• Income must be received through official banking channels.
• To avail the 0.25% rate, you must be registered with PSEB and provide qualifying IT exports.

FBR tax return code for 1% tax is 64060285 and for 0.25% code is 64060290 and also report foreign income in code 6011.

Refund of Tax from FBR

Question 23: If I paid excess tax during the year and my tax return shows that refund, then how can I claim that refund actually?

Answer:

Yes, refunds showing in your return can be claimed and can be received by applying to the Commissioner, but there are certain conditions that need to be fulfilled as below:

• You must be in the Active Taxpayer List (ATL).
• You have no pending tax audits or investigations.
• You don’t owe any taxes or penalties from previous years.
• The refund amount is calculated correctly.
• The refund is based on actual excess tax paid (e.g., advance tax, withholding tax, or over-deduction from salary).
• Only adjustable taxes are claimable, and fixed/final taxes and minimum taxes can’t be claimed for refund.

• Make sure the refund amount is reflected in your return in the IRIS system.
• You provide all the proofs of payment with the refund claim.

• Filing the return alone isn’t enough, and to get claim, you must lodge a separate refund claim in IRIS as per Section 170 of the Income Tax Ordinance, 2001. This formal application initiates the refund process and is available on the IRIS portal.
• Attach all documentary proofs of payment and tax return, and the exact amount of the claim, which must match your return.

• After submission, FBR will verify your return, paid taxes, and documents. Under Section 170, the Commissioner must issue a written decision within 60 days of receiving the application.
• Keep following up with FBR for the claim, as it usually takes more time than stated above.
• If no decision is made within the prescribed time or if the outcome is unsatisfactory, you have the right to file an appeal.

Revision of FBR Tax Returns

Question 24: Can we revise our submitted FBR tax return if we make a mistake or need to add new information?

Answer:

• Yes, you can revise your tax return if any errors or omissions are discovered after submission. The revision must be made within sixty (60) days of the original filing date. Revision forms are available through the FBR’s IRIS Portal.

Please also review Most asked questions and answers on FBR tax return: https:https://accountingblogger.com/fbr-pakistan-non-resident-income-foreign-income/

FBR Pakistan Non-Resident Income & Foreign Income | ATIF

Bottom Line

Filing your FBR tax return is both a legal obligation and a civic duty for every citizen with taxable income. Staying updated on current tax laws and regulations is crucial to ensure that your return is accurate and fully compliant. Maintaining proper financial records and understanding your tax responsibilities can help you avoid penalties and unnecessary legal issues. Timely and correct tax filing promotes transparency and plays a vital role in the country’s economic development.

Disclaimer
This article is for general information only and aims to help readers understand how to file tax returns in Pakistan. As FBR rules and tax return forms change frequently, always check the latest updates and consult a qualified tax advisor before filing. The author and blog are not responsible for any errors, omissions, or outcomes resulting from the use of this information.

Humayun Atif | CMA, CPA, CA (FIN), MS-IT, Oracle Certified, CA Articles from Big4

Atif is passionate about Business, Tech, and the written word. He is the author of the book ‘IFRS Made Easy’. He is a Tax and IFRS coach and the founder of accountingblogger.com