If you are salaried in Pakistan, your employer deducts income tax from your pay every month. That figure is not a flat percentage of your salary — it comes from a slab table that the Finance Act can change each year. The tax year runs from 1 July to 30 June.
The slabs are marginal
This is where most people go wrong. If your income crosses into a higher band, only the amount above that band's starting point is taxed at the higher rate. Each band is a fixed base tax plus a percentage of the amount above its lower limit.
Example: Rs 200,000 per month
- Annual taxable salary: Rs 2,400,000
- That falls in the band 2,200,001 – 3,200,000, so tax = 116,000 + 20% of (2,400,000 − 2,200,000)
- Tax = 116,000 + 40,000 = Rs 156,000 for the year
- Monthly withholding is about Rs 13,000
Check your own salary slip
Take your annual taxable salary — after exemptions such as employer medical reimbursement, or up to 10% of basic salary as a medical allowance where no facility is provided — find your band, add the base tax to the percentage, then divide by twelve. A small difference from your slip is normal; a large one usually means the taxable salary or the exemptions were applied wrongly, and it is worth asking payroll to explain.
Salary slabs are rewritten most years, so always use the table for the current tax year rather than an older one.
Full guide with the current slab table, the surcharge change and the FBR sources: salary tax guide for Pakistan.
