H.S. Advocate & Co. · Lahore
Sole Proprietor vs AOP vs Private Limited — Tax Cost Comparator
Enter your own figures. The tool applies the non-salaried slabs, the Section 4AB surcharge, corporate tax, Alternative Corporate Tax, Section 113 minimum turnover tax and dividend withholding, then shows what each structure actually costs you in a year.
Non-salaried slabs are unchanged between the two years.
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Used for Alternative Corporate Tax at 17%. Leave equal to taxable profit if you have no material book–tax differences.
Statutory audit, annual return, company secretarial work. Shown separately from tax.
Affects the dividend withholding rate only.
Money left inside the company escapes the second layer of tax — until you take it out. Slide to 0% to model full reinvestment.
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Sole Proprietor
FBR only
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AOP / Partnership Firm
FBR + Registrar of Firms
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Private Limited / SMC
SECP + FBR
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Cost of incorporating, per year
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How this is calculated, and what it leaves out
- Sole proprietor and AOP — non-salaried slab rates: nil up to Rs. 600,000, then 15%, 20%, 30%, 40% and 45% above Rs. 5,600,000. A surcharge of 10% of the tax applies under Section 4AB where taxable income exceeds Rs. 10 million.
- Minimum tax under Section 113 — 1.25% of turnover. An individual or AOP enters this net only once turnover crosses Rs. 100 million; a company pays it from its first invoice.
- Company — the higher of normal corporate tax (29%, or 20% for a qualifying small company), Alternative Corporate Tax at 17% of accounting profit, and the Section 113 minimum tax.
- Dividend — 15% withholding for an ATL shareholder, 30% otherwise, applied to the after-tax profit actually distributed.
- Not included — Section 4C super tax (income above Rs. 150 million), tax credits and depreciation differences, provincial sales tax on services, group relief, and the withholding-agent compliance burden a company carries from day one.
- The professional-firm 40% cap applies to firms legally barred from incorporating, such as law and chartered accountancy practices, and is applied here to the AOP column only.
Numbers close? The decision usually isn’t about tax alone.
Liability exposure, bank financing, foreign shareholding and succession often outweigh the rupee gap. We handle FBR registration, AOP formation and SECP incorporation across Pakistan.
Indicative estimate only, based on the Income Tax Ordinance, 2001 as amended up to the Finance Act, 2026. It is not legal or tax advice and no advocate–client relationship arises from its use. Verify against your own facts before acting.