Salary Tax Calculator

How salary tax is actually worked out in Pakistan

Pakistan taxes salaried income on a slab basis, which means no single percentage applies to your whole salary. Your annual taxable salary is split across bands, and each band carries its own rate. The result is that a raise never pushes your entire income into a higher rate — only the portion above the threshold is taxed at the higher rate.

Each slab in the table below has two parts: a fixed amount of tax accumulated from all the lower slabs, plus a percentage applied only to the amount by which your income exceeds that slab's starting point. This is exactly the arithmetic our calculator performs, and it is why the effective rate you end up paying is always lower than the headline rate of your top slab.

A worked example

Take a monthly salary of PKR 250,000, which is PKR 3,000,000 a year. That income falls in the fourth slab, so the tax is PKR 116,000 plus 20% of (3,000,000 − 2,200,000) = 116,000 + 160,000 = PKR 276,000 for the year, or PKR 23,000 a month deducted at source by the employer.

Notice the effective rate: PKR 276,000 on PKR 3,000,000 is 9.2%, not the 20% marginal rate of the slab. People frequently overestimate their liability because they apply the slab rate to their whole salary. If that same person receives a raise to PKR 3,300,000, only the PKR 100,000 above the 3,200,000 threshold is taxed at 25% — the rest is unaffected.

The 9% surcharge has gone for salaried people

Until 30 June 2026, an individual whose taxable income exceeded PKR 10,000,000 paid a surcharge of 9% on the income tax computed — a charge on the tax itself, not on the income. Many calculators and articles still apply it.

The Finance Act, 2026 abolished that surcharge for salaried individuals with effect from 1 July 2026, so it does not form part of the Tax Year 2027 computation on this page. It has not been removed for non-salaried individuals and associations of persons, who continue to face it above the threshold. If you are comparing our figure with an older payslip or another website and theirs is higher at the top end, this is usually the reason.

What counts as taxable salary

Salary for tax purposes is broader than your basic pay. It generally includes basic salary, all cash allowances (house rent, conveyance, utilities, medical allowance paid in cash), bonuses, commissions, leave encashment, and the taxable value of perquisites such as a company-maintained car or accommodation provided by the employer.

• Reimbursement of actual business expenses is not salary, provided it is supported by evidence.
• Medical treatment or reimbursement in line with the terms of employment is exempt up to the limit prescribed in the Ordinance, while a cash medical allowance is exempt only up to 10% of basic salary.
• Employer contributions to a recognised provident fund are treated differently from your own contribution — your contribution is not a deduction from taxable salary, but the accretion rules on the fund matter at withdrawal.
• Gratuity and pension receipts have their own exemption rules and are not simply added to monthly salary.

Salaried vs non-salaried: why the numbers differ

Pakistan applies a separate, generally steeper slab table to business and professional income. You are treated as a salaried individual for slab purposes when salary is more than 75% of your total taxable income for the year. If you draw a salary but also earn substantial freelance or business income, the mix determines which table applies to you — a common reason two people with identical total income pay different tax.

This calculator uses the salaried table. If most of your income comes from a business, a profession, or freelancing paid into your own account, the figure shown here will understate your liability.

How employers deduct it, and how to check your payslip

Employers are required to deduct tax at source each month and deposit it, then report it so that it appears against your CNIC. In practice the annual liability is estimated at the start of the tax year (1 July to 30 June) and spread across twelve months, with adjustments later if your pay changes or you submit evidence of tax credits.

To check your own payslip, take your annual gross taxable salary, run it through this calculator, and divide the annual tax by twelve. If the deduction on your payslip is materially higher, the usual explanations are a bonus being taxed in the month it is paid, a perquisite being valued and added, or arrears from a mid-year increment. If it is materially lower, your employer may not yet have applied a recent raise.

Filing your return even when tax is already deducted

Salaried people often assume that because tax was deducted at source, there is nothing to file. Filing is a separate obligation, and it is what gets you onto the Active Taxpayer List (ATL). Being on the ATL matters in cash terms: non-filers face higher withholding rates on banking transactions, property transfers, vehicle registration and dividend income, which frequently costs more over a year than the effort of filing.

Keep your annual salary certificate from your employer, your tax deduction certificate, bank statements, and evidence of any donations or investments you intend to claim. The return is filed on FBR's IRIS portal after the tax year closes, with the deadline usually falling on 30 September unless extended.

Frequently asked questions