In short
For Tax Year 2027 (1 July 2026 to 30 June 2027) salary in Pakistan is taxed at nil up to PKR 600,000 a year, then 1%, 11%, 20%, 25%, 29%, 32% and 35% above PKR 7 million, with the employer withholding one-twelfth each month under Section 149. PKR 100,000 a month pays PKR 500 a month; PKR 300,000 a month pays about PKR 34,667 a month.
Every salaried person in Pakistan has tax deducted before pay lands in the bank, but few can check whether the deduction is right. This guide sets out the salaried slabs for Tax Year 2027 (the financial year from 1 July 2026 to 30 June 2027, enacted by the Finance Act 2026), shows how your employer turns an annual slab into a monthly deduction, explains why being a filer matters even though the slabs are the same, and works through two salaries in full. You will be able to verify your payslip and estimate the tax on any offer.
Open the Pakistan income tax calculator →
The salaried slabs for Tax Year 2027
The slabs below come from the First Schedule of the Income Tax Ordinance 2001 as substituted by the Finance Act 2026, and apply where salary is more than 75% of your total income. Tax is a fixed amount for the band plus a percentage of income above the band’s floor.
| Annual taxable salary (PKR) | Rate on the excess | Fixed amount (PKR) |
|---|---|---|
| Up to 600,000 | 0% | 0 |
| 600,001 to 1,200,000 | 1% | 0 |
| 1,200,001 to 2,200,000 | 11% | 6,000 |
| 2,200,001 to 3,200,000 | 20% | 116,000 |
| 3,200,001 to 4,100,000 | 25% | 316,000 |
| 4,100,001 to 5,600,000 | 29% | 541,000 |
| 5,600,001 to 7,000,000 | 32% | 976,000 |
| Above 7,000,000 | 35% | 1,424,000 |
Each fixed amount equals the tax at the top of the previous band, so there is no cliff when you cross a threshold: only the extra rupees are taxed at the higher rate. The 2025-26 schedule had six bands with 23% and 30% in the middle; the 2026 Act inserted 25%, 29% and 32% bands, which reduces tax for salaries between PKR 2.2 million and PKR 7 million a year. Below PKR 2.2 million the tax is unchanged.
How monthly withholding works
Employers deduct tax under Section 149 and pay it to the FBR. The method is simple: annualise the expected salary for the year, apply the slabs to get the annual tax, and deduct one-twelfth each month. If pay changes mid-year, the employer recalculates the annual figure and adjusts the remaining months so the total deducted by June matches the annual liability. A bonus is added to the annual salary and taxed at the slab rate, which is why the deduction in a bonus month can look disproportionately large.
“Taxable salary” is gross pay including allowances and bonuses. Employer contributions to a recognised provident fund are not taxed up to 10% of salary or PKR 150,000 a year. The Pakistan salary calculator builds the full payslip: tax, EOBI, provident fund and the cost to the employer.
Worked examples
PKR 100,000 a month
Annual salary = 100,000 × 12 = PKR 1,200,000, which is exactly the top of the 1% band. Tax = 0 + 1% × (1,200,000 − 600,000) = PKR 6,000 a year, or PKR 500 a month. Effective rate 0.5%.
PKR 300,000 a month
Annual salary = PKR 3,600,000, which falls in the 25% band (3,200,001 to 4,100,000). Tax = 316,000 + 25% × (3,600,000 − 3,200,000) = 316,000 + 100,000 = PKR 416,000 a year, or PKR 34,667 a month. Effective rate 11.6%; marginal rate 25%. Take-home before other deductions is PKR 265,333 a month.
For reference, PKR 150,000 a month (PKR 1.8 million a year) pays 6,000 + 11% × 600,000 = PKR 72,000 a year, PKR 6,000 a month, and PKR 200,000 a month pays PKR 156,000 a year, about PKR 13,000 a month.
Filer versus non-filer
The salary slabs are identical whether or not you are on the Active Taxpayers List (ATL). The difference is everywhere else. Withholding on bank profit is 20% for ATL persons and 40% for non-filers under Section 151; dividends are 15% against 30%; buying property attracts 1.25% advance tax for filers and 10.5% to 18.5% for non-filers under Section 236K; and non-filers pay 0.8% on cash withdrawals above PKR 50,000 a day. A salaried person whose employer deducts tax every month but who never files a return is still a non-filer for all of these. Filing is what puts you on the ATL.
The bank profit calculator shows the 20% versus 40% withholding on savings and term deposits side by side.
Common deductions and credits
The slabs apply to gross salary; relief comes afterwards. Items that commonly reduce the final bill or the taxable figure:
- Recognised provident fund. Your own contribution, typically 8.33% or 10% of basic, qualifies for a tax credit, and the employer’s matching contribution is exempt up to 10% of salary or PKR 150,000 a year. Profit credited to the fund is exempt within limits. See the provident fund calculator.
- EOBI. The employee contribution is 1% of the PKR 37,000 minimum wage (PKR 370 a month, with the employer paying 5%). It is small but it is a deduction from pay that the calculator includes.
- Approved pension funds and donations to approved institutions earn tax credits claimed in the return, not through payroll.
- Advance tax already paid on property, vehicles, bank profit or phone bills is adjustable against the salary tax in the return. This is often the largest refund a salaried filer is owed and the most common reason to file.
The 10% surcharge under Section 4AB on taxable income above PKR 10 million applies to non-salaried individuals and associations of persons; salaried individuals are exempt from Tax Year 2027.
What people get wrong
- Applying the top rate to the whole salary. Only income above each threshold is taxed at that band’s rate. PKR 3.6 million a year pays 11.6% overall, not 25%.
- Using business slabs for salary. Non-salaried individuals have a separate schedule with 15%, 20%, 30%, 40% and 45% rates. If salary is more than 75% of your income, the salaried slabs apply.
- Thinking monthly deduction means you have filed. Withholding is not a return. Without a return you stay off the ATL and pay double withholding on bank profit and property.
- Treating the bonus month as an error. The jump is the slab applied to a higher annual figure, adjusted across the remaining months.
- Using last year’s slabs. The bands changed on 1 July 2026; a 2025-26 table overstates tax between PKR 2.2 million and PKR 7 million.
Frequently asked questions
What is the tax on PKR 50,000 a month?
None. PKR 600,000 a year is the exempt threshold for salaried persons.
When does the tax year run?
From 1 July to 30 June. Tax Year 2027 covers salary paid between 1 July 2026 and 30 June 2027; the return is filed after the year ends.
Is the 75% salary test important?
Yes. The salaried slabs apply only if salary is more than 75% of your total taxable income. Substantial rental or business income can move you onto the non-salaried schedule.
Can my employer refund over-deducted tax?
The employer adjusts within the tax year. After June any excess is claimed as a refund through your return on IRIS.
Does a medical allowance count as salary?
Allowances are generally part of taxable salary unless specifically exempt under the Second Schedule; check the treatment of each item on your salary certificate.
Sources
- FBR — Income Tax Ordinance 2001, First Schedule, Part I, Division I, as substituted by the Finance Act 2026, confirmed against the Withholding Tax Rates Card for Section 149 (checked 26 October 2026).
- FBR — Withholding Tax Rates Card TY2027, Sections 151, 150, 231AB, 236K (checked 26 October 2026).
- Income Tax Ordinance 2001, Sixth Schedule, recognised provident fund limits (checked 8 October 2026).
- KPMG — A Brief of Finance Act 2026, non-salaried slabs and Section 4AB surcharge (checked 26 October 2026).
- EOBI — contribution rates (rates as applied by the salary calculator; not independently verified).