Business & AOP tax calculator 2026-27
Income tax on business profit for sole proprietors, freelancers and partnerships (AOPs), worked out from your revenue and expenses.
Your business
Expenses must be wholly for the business and supported by records. Depreciation, minimum tax and withholding already deducted at source are not included in this estimate.
Advance tax is paid in quarterly instalments under section 147. See the compliance calendar for dates.
| Band | Rate | Tax |
|---|
Rates: Finance Act 2026 and FBR withholding tax rate card, tax year 2027 (1 July 2026 – 30 June 2027). Estimates for guidance only, not advice on your case. Exemptions, credits and special regimes can change the result.
Slabs for business individuals and AOPs, tax year 2027
Sole proprietors, freelancers and other non-salaried individuals, and associations of persons such as partnership firms, are taxed on the same slabs. The Finance Act 2026 left these rates unchanged.
| Taxable income (Rs) | Fixed tax | Rate on excess |
|---|---|---|
| 0 – 600,000 | Rs 0 | 0% |
| 600,000 – 1,200,000 | Rs 0 | 15% |
| 1,200,000 – 1,600,000 | Rs 90,000 | 20% |
| 1,600,000 – 3,200,000 | Rs 170,000 | 30% |
| 3,200,000 – 5,600,000 | Rs 650,000 | 40% |
| 5,600,000 – and above | Rs 1,610,000 | 45% |
The 10% surcharge
Where taxable income exceeds Rs 10 million, a surcharge of 10% of the tax is added for individuals and AOPs. It no longer applies to salary income.
How AOPs are taxed
- The AOP itself pays tax on its total profit at these rates.
- Each partner's share of the AOP's after-tax profit is generally exempt in the partner's hands under section 92, but it is included when working out the rate on the partner's other income.
- Professional firms that cannot incorporate, such as chartered accountants and lawyers, may be capped at a lower top rate.
What this estimate leaves out
- Minimum tax on turnover and final or fixed tax regimes for some sectors.
- Super tax under section 4C, which applies to very high incomes.
- Tax credits and tax already deducted at source, which reduce what you pay with the return.
Common questions
Is an AOP taxed the same as a sole proprietor?
For tax year 2027 the slab rates are the same. The difference is that the AOP pays the tax on the firm's total profit, and partners then generally receive their share of after-tax profit exempt from further tax under section 92.
When does the 10% surcharge apply?
When taxable income exceeds Rs 10 million, for individuals with business income and for AOPs. It is 10% of the tax worked out on the slabs.
Should my business become a company instead?
Companies pay a flat corporate rate rather than slabs, so incorporation can reduce tax at higher profits, but it adds SECP compliance and audit costs. We model both before you decide.
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