What income tax slab rates apply to a professional's practice income in tax year 2027?

A professional’s practice profit is business income, so the rate that applies is the individual rate for people who are not salaried. The Income Tax Ordinance, 2001 keeps two tables for individuals in Division I of Part I of the First Schedule, and the difference between them is large at every income level above Rs. 600,000.

What does the law say?

Section 4 imposes income tax for each tax year at the rates in Division I or II of Part I of the First Schedule on every person with taxable income. Section 9 makes taxable income the total income for the year less any deductible allowances.

Clause (1) of Division I sets the rates on the income of “every individual and association of persons except a salaried individual”. This is the table for self-employed professionals and professional firms. It was last substituted by the Finance Act, 2024, and the text as amended to 30 June 2026 shows no later change, so it applies to tax year 2027.

Clause (2) sets a separate table for an individual whose income under the head Salary exceeds seventy-five per cent of taxable income. The Finance Act, 2026 substituted that table.

What are the tax year 2027 rates?

Clause (1): individuals and associations of persons other than salaried individuals

Taxable income	Tax
Up to Rs. 600,000	0%
Over Rs. 600,000 up to Rs. 1,200,000	15% of the amount over Rs. 600,000
Over Rs. 1,200,000 up to Rs. 1,600,000	Rs. 90,000 + 20% of the amount over Rs. 1,200,000
Over Rs. 1,600,000 up to Rs. 3,200,000	Rs. 170,000 + 30% of the amount over Rs. 1,600,000
Over Rs. 3,200,000 up to Rs. 5,600,000	Rs. 650,000 + 40% of the amount over Rs. 3,200,000
Over Rs. 5,600,000	Rs. 1,610,000 + 45% of the amount over Rs. 5,600,000

A proviso to this table says that for an association of persons that is a professional firm prohibited from incorporating by any law or by the rules of the body regulating its profession, the 45% rate in the last slab is 40%.

Clause (2): salary more than 75% of taxable income, for comparison

Taxable income	Tax
Up to Rs. 600,000	0%
Over Rs. 600,000 up to Rs. 1,200,000	1% of the amount over Rs. 600,000
Over Rs. 1,200,000 up to Rs. 2,200,000	Rs. 6,000 + 11% of the amount over Rs. 1,200,000
Over Rs. 2,200,000 up to Rs. 3,200,000	Rs. 116,000 + 20% of the amount over Rs. 2,200,000
Over Rs. 3,200,000 up to Rs. 4,100,000	Rs. 316,000 + 25% of the amount over Rs. 3,200,000
Over Rs. 4,100,000 up to Rs. 5,600,000	Rs. 541,000 + 29% of the amount over Rs. 4,100,000
Over Rs. 5,600,000 up to Rs. 7,000,000	Rs. 976,000 + 32% of the amount over Rs. 5,600,000
Over Rs. 7,000,000	Rs. 1,424,000 + 35% of the amount over Rs. 7,000,000

Surcharge. Section 4AB, printed within section 4 in the consolidated text, adds a surcharge for every individual and association of persons at ten percent of the income tax under Division I where taxable income exceeds Rs. 10 million. Its proviso says no surcharge is payable by an individual deriving income chargeable under the head Salary.

Worked example (illustrative figures)

An advocate in Karachi. Advocate Farhan Siddiqui has made-up taxable income of Rs. 4,000,000 from his practice in tax year 2027, and no salary.

1. Rs. 4,000,000 falls in the slab over Rs. 3,200,000 up to Rs. 5,600,000.
2. Amount over Rs. 3,200,000: Rs. 800,000.
3. 40% of Rs. 800,000 = Rs. 320,000.
4. Tax: Rs. 650,000 + Rs. 320,000 = Rs. 970,000.

The same Rs. 4,000,000 under the clause (2) salaried table would be Rs. 316,000 + 25% of Rs. 800,000 = Rs. 516,000. The self-employed figure is Rs. 454,000 higher.

A consultant physician in Islamabad. Dr. Nadia Qureshi has made-up taxable income of Rs. 12,000,000 from private practice.

1. Amount over Rs. 5,600,000: Rs. 6,400,000.
2. 45% of Rs. 6,400,000 = Rs. 2,880,000.
3. Tax under Division I: Rs. 1,610,000 + Rs. 2,880,000 = Rs. 4,490,000.
4. Taxable income exceeds Rs. 10 million, so the surcharge is 10% of Rs. 4,490,000 = Rs. 449,000.
5. Total: Rs. 4,490,000 + Rs. 449,000 = Rs. 4,939,000.

What if …?

What if I also draw a salary? The table depends on the share of salary in taxable income. Only where salary exceeds 75% does clause (2) apply, and then to the whole taxable income. At 75% or below, clause (1) applies to everything, salary included.

What if we practise as a firm? A firm that is an association of persons also uses the clause (1) table. If it is a professional firm that the law or its regulating body prohibits from incorporating, its top slab is 40% instead of 45%. Which firms meet that condition depends on rules outside this corpus. How an association’s income and its members’ shares are taxed is covered on the partnership page in this category.

What if tax was deducted from my fees? Tax withheld is credited against the tax worked out from these tables. It does not change which table applies.

Common mistakes

• Using the salaried table for practice income. Clause (2) is limited to individuals whose salary is more than 75% of taxable income.
• Applying the top rate to the whole income. Each rate applies only to the amount above the slab’s starting point, plus the fixed amount for the lower slabs.
• Forgetting the surcharge. Above Rs. 10 million of taxable income, a self-employed professional pays ten percent on top of the tax.
• Assuming the 40% rate applies to individuals. The proviso refers to an association of persons that is a professional firm, not to a sole practitioner.

What to check in the official text

Read clauses (1) and (2) of Division I, Part I of the First Schedule in the official PDF, including the proviso on professional firms, and section 4AB within section 4. Check section 9 for how taxable income is reached. Tax credits, minimum tax on withheld fees and advance tax change what is payable at the end of the year but not the slab table itself.