Salary Tax Slabs in Pakistan Explained

Salaried individuals in Pakistan are taxed under a progressive slab system, which means different portions of your annual income are taxed at different rates. Many people wrongly assume that crossing into a higher slab means their entire salary is taxed at that higher rate. In reality, only the amount above the slab threshold attracts the higher percentage.

The first slab is tax free. Annual taxable income up to Rs. 600,000 carries no income tax at all, which protects lower income earners from the burden of direct taxation. Above that, the rate begins at a modest one percent and rises step by step as income increases.

The middle slabs are where most professionals sit. Income between Rs. 1,200,001 and Rs. 2,200,000 is charged a fixed amount plus eleven percent of the excess, and the band above it moves to twenty percent. This is why a raise can feel smaller than expected once deductions are applied.

High earners face rates of twenty five, twenty nine, thirty two and finally thirty five percent on income above Rs. 7,000,000. On top of this, an additional surcharge of nine percent of the calculated income tax applies where taxable income exceeds Rs. 10,000,000.

Your employer deducts tax at source every month and deposits it with the Federal Board of Revenue. The deduction is an estimate based on your projected annual salary, so bonuses, arrears or a mid-year job change can cause your final liability to differ from what was withheld.

The practical takeaway is to check your payslip against the slab table at least twice a year. Using an online salary tax calculator takes a minute and prevents unpleasant surprises at return filing time.

Finally, remember that filing a return is separate from paying tax. Even if your employer has deducted every rupee correctly, you still need to file annually to stay on the Active Taxpayers List and enjoy filer benefits.