Pakistan salary tax calculator

A 1% entry rate, then two very large steps

The Pakistani salary scale has eight slabs and an unusual shape. The first Rs 600,000 is exempt. The next Rs 600,000 is charged at 1.0% — a rate so low it produces Rs 6,000 of tax across the whole band.

Then it accelerates hard. From Rs 1,200,000 the rate is 11.0%, and from Rs 2,200,000 it is 20.0%. Those two moves — ten points and nine points — are the largest single steps anywhere on this site's ten countries.

Above Rs 3,200,000 the increments settle down: 25.0%, 29.0%, 32.0%, and 35.0% from Rs 7,000,000. The progressivity of the Pakistani system is concentrated almost entirely in the range between Rs 1,200,000 and Rs 3,200,000.

On Rs 2,400,000 of taxable salary the tax is Rs 156,000 — an effective rate of 6.5% against a marginal band of 20.0%. The gap between those two numbers is wide precisely because so much income below sits in the 1.0% and 11.0% bands.

The practical consequence for a salaried professional is that a raise through that middle range is taxed far harder than the headline suggests, while a raise at the very bottom is barely taxed at all.

The 9% surcharge on high salaries no longer exists

Section 4AB of the Income Tax Ordinance imposed a surcharge on high earners, with a proviso that applied it to salaried individuals at nine per cent of the income tax where income exceeded ten million rupees in a tax year.

The Finance Act 2026 removed it. The Act amends section 4AB and substitutes that entire proviso — the words imposing "a surcharge (…) at the rate of nine percent of the income tax imposed under Division I of Part I of the First Schedule where the income exceeds rupees ten million in a tax year" — with the words "no surcharge shall be payable."

The effect is concrete. A salaried individual on Rs 12,000,000 pays Rs 3,174,000 under the current scale. Under the old proviso, roughly Rs 283,000 of surcharge would have been added on top of that.

Any calculator or summary that still applies the nine per cent above Rs 10,000,000 is now producing figures that are too high, and a great many still do — the change is recent, it is buried in a Gazette amendment rather than announced as a rate cut, and the section it edits is one most secondary sources never covered in the first place.

This calculator applies no surcharge to salary, and says so as a line in the result rather than leaving it silently absent. A zero that is stated is checkable; a zero that is merely missing is indistinguishable from an omission.

The scale is in the Gazette, not on the FBR website

The FBR's site has pages on registering, filing, paying and appealing, and a page of income tax basics that defines taxable income, residence and the tax year. What it does not have is a page listing the salary slabs.

That is not an oversight. The rates live in the First Schedule to the Income Tax Ordinance 2001, and they are changed each year by the Finance Act, which is published in the Gazette of Pakistan. The Act is the rate table; there is no separate summary with the force of law.

The figures on this page come from the Finance Act 2026, published in the Gazette on 26 June 2026, at the point where it substitutes the table in the First Schedule, Part I, Division I, clause (2) — the salaried table. This site's tests reproduce all seven published cumulative amounts, from Rs 6,000 at Rs 1,200,000 up to Rs 1,424,000 at Rs 7,000,000.

Clause (2) is specifically the salaried table. There is a separate table for non-salaried individuals and associations of persons, with the same thresholds and higher rates, and the two are frequently conflated in secondary write-ups.

Which one applies is a test, not a choice: an individual falls under the salaried table where salary is more than half of taxable income for the year. Someone with substantial business or property income alongside a salary may not qualify.

The tax year runs July to June and is named for the year it ends

Pakistan's tax year is twelve months ending 30 June, and it takes the name of the calendar year in which that 30 June falls. The year from 1 July 2026 to 30 June 2027 is therefore tax year 2027.

That naming is the single most common source of confusion in Pakistani tax discussion, because the Finance Act that sets a year's rates is named for the year it is passed. The Finance Act 2026, passed in June 2026, sets the rates for tax year 2027.

Three of the ten countries here share the July-to-June pattern in some form — Australia runs 1 July to 30 June, and Pakistan matches it exactly — while New Zealand runs April to March, the UK from 6 April, South Africa from 1 March, and the rest use the calendar year.

The practical effect is on comparisons. A salary quoted for "2026" in Pakistan may sit under either of two scales depending on which half of the calendar year it falls in, and a change announced in June applies from the following month rather than from January.

This page models tax year 2027, which is the year currently running.

The scale at four salaries

Each figure is annual taxable salary, under the salaried table for tax year 2027. No deductible allowance or tax credit is applied.

On Rs 1,200,000: Rs 6,000 of tax, an effective rate of 0.5% with a marginal rate of 1.0%.

On Rs 2,400,000: Rs 156,000 of tax, an effective rate of 6.5% with a marginal rate of 20.0%.

On Rs 4,800,000: Rs 744,000 of tax, an effective rate of 15.5% with a marginal rate of 29.0%.

On Rs 9,000,000: Rs 2,124,000 of tax, an effective rate of 23.6% with a marginal rate of 35.0%.

The jump between the first two lines is the clearest illustration of the scale's shape: doubling salary from Rs 1,200,000 multiplies the tax by far more than two, because the second million crosses two of the largest steps in the table.

How Pakistan compares with the rest of this site

Against India, the neighbour and the obvious comparison, the shapes differ more than expected. India's new regime eases up through several moderate steps and cancels the tax entirely below a rebate threshold; Pakistan uses a token 1.0% band and then two very steep jumps, with no rebate mechanism at all.

Against Malaysia, both start with a near-symbolic entry rate — 1.0% in each case. Malaysia keeps easing through four narrow bands; Pakistan goes from 1.0% to 11.0% in a single move.

Against the Philippines, the exempt bands do similar work relative to local wages, and the top rates are the same at 35.0%. The Philippines reaches it at ₱8,000,000; Pakistan at Rs 7,000,000, which in relative terms is a great deal sooner.

Against Australia, the calendar is identical — 1 July to 30 June — and almost nothing else is. Australia adds a Medicare levy outside the table; Pakistan adds nothing to salary since the surcharge went.

What is genuinely unusual about Pakistan on this site is how much of the real tax burden sits outside income tax on salary: withholding at source on utility bills, banking transactions, vehicle registration and property transfers is a large part of what a taxpayer actually pays, and none of it is on this scale.

Deductible allowances and credits, which this page does not apply

Pakistani law separates deductible allowances, which reduce taxable income, from tax credits, which reduce the tax. Both exist for salaried individuals and neither is applied in the figure above.

Zakat paid under the Zakat and Ushr Ordinance is a deductible allowance, taken off before the scale. Workers' welfare fund contributions are treated the same way.

Charitable donations to approved institutions attract a tax credit computed at the taxpayer's average rate, which makes the credit worth more to someone higher up the scale — the opposite of how a fixed credit behaves in Canada or South Africa.

Contributions to an approved pension fund also attract a credit, subject to limits by age and income. For a salaried professional it is generally the largest single reduction available.

Because none of these is applied, the figure on this page is the tax before reliefs — an upper bound in the same sense as the Malaysian figure, and for the same reason: the calculator cannot know what you contributed or gave.

Four ways a Pakistani estimate goes wrong

Adding the 9% surcharge above Rs 10,000,000. It was removed for salaried individuals by the Finance Act 2026 and is the single most common error in figures circulating now.

Using the non-salaried table. The thresholds are identical and the rates are not. Which table applies turns on whether salary is more than half of taxable income.

Confusing the Finance Act's year with the tax year. The Finance Act 2026 sets the rates for tax year 2027. A page labelled "2026 rates" may mean either.

Reading the slabs as flat rates. They are marginal. Someone on Rs 2,500,000 does not pay 20.0% on all of it — they pay nothing on the first Rs 600,000, 1.0% on the next Rs 600,000, 11.0% on the next million, and 20.0% only on the balance.

Withholding at source, and why the salary scale understates the burden

Pakistan collects a large share of its direct tax through withholding on transactions rather than through assessment of income, and a salaried taxpayer meets it constantly.

Tax is deducted on electricity and telephone bills, on banking transactions, on vehicle registration and transfer, on property purchase and sale, and on a long list of other everyday dealings. Much of it is adjustable against the year's income tax liability, and some of it is not.

The distinction between adjustable and final matters enormously and is poorly understood. An adjustable deduction is a prepayment recoverable through the return; a final one is a tax in its own right that no return recovers.

Rates on several of these are higher for people not on the Active Taxpayer List, which turns filing into a direct financial decision rather than a compliance formality. Someone outside the list pays more for the same transactions.

None of this is on the salary scale, and it is why the tax a Pakistani professional actually bears through a year is larger than any slab table implies.

Deduction by the employer, and the return that still follows

An employer deducts tax from salary each month under section 149, estimating the year's liability and spreading it across the pay periods. For a steady salary the estimate lands close.

It lands badly for anything irregular. A bonus, a mid-year raise or arrears change the annualised figure, and the adjustment lands in whichever month the employer recomputes rather than being spread evenly.

Filing is separate from deduction. A salaried individual above the filing threshold files an annual return through the FBR's IRIS portal, and the return is where deductible allowances and tax credits are actually claimed — the employer generally does not apply them.

The wealth statement is filed alongside the return for most individuals, reconciling assets and liabilities year on year. It is a Pakistani feature with no close parallel elsewhere on this site, and unexplained movement in it is what draws attention.

Filing also places a taxpayer on the Active Taxpayer List, which lowers withholding rates on a range of unrelated transactions. That indirect benefit is often larger than anything the return itself recovers.

Why the middle of the scale is where it hurts

Between Rs 1,200,000 and Rs 3,200,000 the marginal rate goes from 1.0% to 11.0% to 20.0%. Two jumps, nineteen points, across two million rupees of income.

That is where most salaried professional pay sits, which means the scale's steepest section coincides with the largest concentration of taxpayers rather than sitting harmlessly above them.

The effect on a raise is severe and non-obvious. Moving from Rs 2,000,000 to Rs 2,400,000 costs Rs 62,000 of extra tax on Rs 400,000 of extra salary, because most of the increase lands above the Rs 2,200,000 line.

Above Rs 3,200,000 the steps shrink to four, three and four points. The scale is far gentler in its upper half than in its middle, which is the reverse of how most of the systems on this site are shaped.

Removing the surcharge above Rs 10,000,000 flattens the top further still. Whatever one makes of that as policy, it is the current law and it is what this calculator applies.

Filer and non-filer, the two-tier system alongside the scale

Pakistan runs a distinction found almost nowhere else: many withholding rates are set at one level for people on the Active Taxpayer List and a higher level for everyone else.

The list is published and updated by the FBR, and inclusion follows from having filed the return for the relevant year. It is not a status granted on request, and it lapses when filing does.

The financial consequence falls outside income tax entirely. Vehicle registration, property transfer, banking transactions and a range of other dealings cost more for someone off the list, and for a person transacting at any scale the difference can exceed the tax the return itself would have produced.

That makes the Pakistani filing decision unusual. In most systems, filing is compliance; here it is also a price. The policy intent is explicit — to widen the base by making non-filing expensive rather than merely unlawful.

Nothing in this arrangement changes the salary slabs, and none of it is in the figure above. It is described here because a salaried Pakistani reader weighing whether the return is worth filing is asking a question the scale alone cannot answer.

Questions

How much tax do I pay on a salary of Rs 2,400,000 in Pakistan?

Rs 156,000 for tax year 2027 — an effective rate of 6.5% with a marginal rate of 20.0%. The first Rs 600,000 is exempt, the next Rs 600,000 is taxed at 1.0%, and only the balance reaches the higher bands.

What are the salary tax slabs in Pakistan?

Eight slabs on taxable salary: nothing to Rs 600,000; 1.0% of the excess to Rs 1,200,000; Rs 6,000 plus 11.0% to Rs 2,200,000; Rs 116,000 plus 20.0% to Rs 3,200,000; Rs 316,000 plus 25.0% to Rs 4,100,000; Rs 541,000 plus 29.0% to Rs 5,600,000; Rs 976,000 plus 32.0% to Rs 7,000,000; and Rs 1,424,000 plus 35.0% above that.

Is there still a surcharge on salaries above Rs 10 million?

No. The Finance Act 2026 amended section 4AB and replaced the proviso imposing a nine per cent surcharge on salaried individuals above ten million rupees with the words "no surcharge shall be payable". A salary of Rs 12,000,000 therefore carries Rs 3,174,000 of tax and nothing on top. Figures that still add the surcharge are too high.

When does the Pakistani tax year run?

From 1 July to 30 June, named for the calendar year in which it ends. The year running now is tax year 2027, covering 1 July 2026 to 30 June 2027, and its rates were set by the Finance Act 2026 passed in June 2026.

Where are the official Pakistani tax rates published?

In the First Schedule to the Income Tax Ordinance 2001, amended each year by the Finance Act and published in the Gazette of Pakistan. The FBR website covers registration, filing and payment but does not publish the salary slab table itself, which is why the source here is the Finance Act 2026 as gazetted on 26 June 2026.

Do these rates apply to business income?

No. This is clause (2) of Division I — the salaried table. Non-salaried individuals and associations of persons fall under a separate table with the same thresholds and higher rates. An individual is treated as salaried for this purpose where salary exceeds half of taxable income for the year.

What reduces Pakistani salary tax?

Deductible allowances reduce taxable income — zakat paid under the Zakat and Ushr Ordinance, and workers’ welfare contributions. Tax credits reduce the tax itself: charitable donations to approved institutions, computed at your average rate, and contributions to an approved pension fund subject to age and income limits. None of them is applied in the figure above.