Income Tax on Salary in Pakistan: 2026–27 Guide

In Pakistan, income tax on salary is worked out on your annual taxable salary using the FBR's progressive slabs, and your employer deducts it in monthly instalments. For Tax Year 2027 (FY 2026–27), the first PKR 600,000 of annual taxable salary is tax-free; income above that is taxed band-by-band, and the annual tax is spread across 12 months. The previous 9.0% high-income surcharge no longer applies to salaried individuals.

What counts as salary income

Salary income is more than your basic pay. It generally includes basic salary, most cash allowances, bonuses and commissions, and the taxable value of perquisites (such as a company-provided car or accommodation). Certain employer-provided medical benefits, reimbursements or allowances may receive exempt treatment when the applicable legal conditions and documentation requirements are satisfied — do not subtract an allowance automatically without confirming the current rule and your payroll treatment. Your taxable salary is your total salary minus any genuinely exempt portions, and it is this figure the slabs are applied to.

How annualisation works

FBR slabs are defined on annual taxable income, but you are paid monthly. Your employer therefore estimates your taxable salary for the tax year, calculates the annual tax on the slabs, and deducts roughly one-twelfth each month. When you join or leave part-way through the year, the payroll treatment depends on the information available to the employer, your period of employment, any other employment or expected annual income, and end-of-year reconciliation — so the monthly figure is an estimate that is trued up over the year.

How the monthly tax is calculated

For income inside a slab, the annual tax is:

Annual tax = fixed amount of your slab + slab rate × (taxable income − slab threshold).

Monthly tax = annual tax ÷ 12. Because the system is progressive, only the part of your salary that falls inside a higher band is taxed at the higher rate — a pay rise never reduces your take-home pay. See the full slab table in the Pakistan salary tax guide.

Bonuses, allowances and perquisites

A bonus is added on top of your salary for the year, so the incremental tax on it will often approximate your marginal (highest) rate rather than your average rate — which is why a bonus can look heavily taxed. Actual payroll withholding may differ because employers annualise income and reconcile deductions across the year. Taxable allowances and perquisites are treated similarly. You can isolate the effect of a bonus with the bonus tax calculator.

Employer withholding and the salary certificate

Your employer withholds tax at source and deposits it with the FBR on your behalf, then issues a salary certificate (and files withholding statements) showing the tax deducted. Keep your monthly payslips and the annual salary certificate — you will need them when you file your return and reconcile the tax already deducted.

Year-end adjustment and filing

Near the end of the tax year, your employer reconciles the tax deducted so far against your actual annual salary and adjusts the final months if needed. Separately, many salaried individuals are required, or choose, to file an annual income tax return — depending on their income, assets, other statutory criteria and filer-status objectives — to appear on the Active Taxpayers List and to declare other income and a wealth statement. Tax withheld by an employer does not by itself determine every individual's filing obligation; deduction and filing are separate matters, so check your position against the current rules.

Worked examples (Tax Year 2027)

These are computed live from the current FBR slabs, based on taxable salary (income tax only, before provident fund or EOBI):

What changed for Tax Year 2027

Finance Act 2026 lowered the marginal rates on the middle salary bands and added new bands so the top 35% rate only applies to very high incomes, and abolished the 9.0% high-income surcharge for salaried individuals. To see the exact rupee difference for your income, use the tax year comparison tool. Always verify the final figure with the FBR before filing.