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Company Tax Return vs Individual Return – What’s the Difference?

Every taxpayer in Pakistan—whether a salaried person, freelancer, or business owner—must file an annual return with the Federal Board of Revenue (FBR). However, the process, forms, and compliance requirements differ depending on whether the filer is an individual or a company. Understanding these differences helps ensure accurate filing, avoid penalties, and maintain active taxpayer status with FBR.

What is an Individual Tax Return?

An individual tax return applies to natural persons—salaried employees, freelancers, sole proprietors, and professionals—who earn income from employment, business, rent, or other sources. It is filed through the IRIS portal using the prescribed FBR form for individuals. The return includes details of income, deductions, and tax payments made during the financial year (July to June).

What is a Company Tax Return?

A company tax return applies to entities registered under the Companies Act, 2017 with the Securities and Exchange Commission of Pakistan (SECP). This includes Private Limited Companies (Pvt Ltd) and Public Limited Companies. Companies must file income tax returns, withholding statements, and audited financial statements with FBR annually through the IRIS portal.

Key Differences Between Company and Individual Tax Returns

Category	Individual Tax Return	Company Tax Return
Legal Entity	Natural person	Separate legal entity registered with SECP
Registration	Registered with FBR only (using CNIC)	Registered with both SECP and FBR (with NTN)
Tax Year	July 1 – June 30	July 1 – June 30
Tax Form on IRIS	Form for Salaried / Business Individual	Company Return Form
Financial Statements	Optional for small businesses	Mandatory audited financial statements
Tax Rate (2025)	Progressive slab rates (5%–35%)	Fixed corporate tax rate (29% for general companies)
Filing Frequency	Annual income return	Annual income return + quarterly withholding statements
Withholding Obligations	Limited (if any)	Required for payments to vendors, salaries, and services
Tax Audit Possibility	Based on risk selection	High audit probability for corporations
Signatory	Individual taxpayer	CEO or authorized director

Tax Rate Comparison for 2025

Category	Income Range	Tax Rate
Individual (Salaried)	Up to Rs. 600,000	0%
	Rs. 600,001 – Rs. 1,200,000	5%
	Rs. 1,200,001 – Rs. 2,400,000	15%
	Rs. 2,400,001 – Rs. 4,000,000	25%
	Above Rs. 4,000,000	35%
Company (Corporate Rate)	All income	29% (general)
Banking Companies	All income	39%
Small Companies	Turnover below Rs. 250 million	20%

Documents Required for Filing Individual Returns

CNIC of the filer
Salary certificate (for employees)
Bank account details
Rent agreements (if applicable)
Utility and expense records for business individuals
Tax deduction certificates (if any)
Details of assets and liabilities (Wealth Statement)

Documents Required for Filing Company Returns

NTN certificate and SECP incorporation documents
Audited financial statements (balance sheet, income statement, cash flow)
Bank statements and transaction records
Details of directors and shareholders
Withholding tax statements (Form 3A, 3B, 3C, etc.)
Proof of tax challans and advance payments
Reconciliation of sales tax returns (if registered under sales tax)

Filing Process for Individuals on IRIS

Visit https://iris.fbr.gov.pk and log in using CNIC and password.
Select the Income Tax Return for Individuals.
Enter income details under salary, business, or property.
Declare tax deductions and expenses.
Attach supporting documents where applicable.
Submit the Wealth Statement (mandatory for filers with taxable income).
Pay any due tax and generate CPR (Computerized Payment Receipt).
Submit and verify the return electronically.

Filing Process for Companies on IRIS

Log into IRIS with the company’s NTN and password.
Select Company Return Form under the Returns tab.
Enter financial data from audited accounts.
Attach profit and loss account, balance sheet, and supporting schedules.
Declare withholding tax deductions and credits.
Submit annual income return, withholding statements, and sales tax reconciliation (if applicable).
Generate and attach tax payment receipts (CPRs).
Submit return before the FBR due date to maintain active status.

Compliance and Audit Differences

Companies are subject to more frequent FBR audits due to higher compliance risk. They must maintain formal records, including vouchers, ledgers, payroll details, and third-party agreements. Individuals are audited less often but may still be selected randomly or through risk assessment. Companies are also required to maintain corporate governance and comply with both SECP and FBR regulations simultaneously.

Penalties for Late Filing

Type	Penalty
Individual	Minimum Rs. 10,000 or 0.1% of tax payable per day (whichever is higher)
Company	Up to Rs. 50,000 for non-filing or 0.1% of tax payable per day
Failure to File Wealth Statement	Rs. 20,000 fixed penalty

Which Return Should You File?

Freelancers, consultants, and employees file individual tax returns using CNIC-based registration.
Companies, tech startups, or incorporated entities must file company tax returns using their NTN linked to SECP registration.
Sole proprietors file as individuals, even if they operate under a business name.

Tips for Compliance

Keep all business and financial documents updated year-round.
Reconcile income tax returns with sales tax filings (if registered).
File returns before deadlines—individuals by 30th September and companies by 31st December (for tax year ending June).
Consult a professional tax advisor for complex transactions.
Maintain digital copies of FBR receipts and challans for record.

Conclusion

The main difference between company and individual tax returns lies in legal structure, filing complexity, documentation, and compliance requirements. Individuals focus on personal or small business income, while companies must meet corporate, financial, and regulatory standards. Understanding these differences ensures smooth tax filing, maintains active status, and helps avoid FBR penalties in 2025.