How Much Tax Is Deducted From Salary in Pakistan?

When your salary arrives each month, the amount in your bank account is usually less than the salary written in your offer letter. The difference is mostly income tax deducted at source by your employer. Many salaried people in Pakistan see this deduction on their payslip every month but do not know how much tax is deducted from salary in Pakistan or how it is calculated, which tax slab applies to them, or whether the amount is correct.

In this guide, you will learn exactly how much tax is deducted from salary in Pakistan under the FBR slabs for 2026-27. You will see the full slab table, a monthly deduction table for salaries from Rs 50,000 to Rs 500,000, a step-by-step worked example, and how to check your own payslip.

How Salary Tax Deduction Works in Pakistan

Your employer deducts income tax from your salary every month under Section 149 of the Income Tax Ordinance, 2001. This is called deduction at source. Your employer does not guess the amount. The calculation follows a fixed method:

1. Your employer estimates your total taxable salary for the full tax year.
2. The annual tax is calculated using the FBR slabs for that year.
3. The annual tax is divided by 12, and that monthly amount is deducted from your salary.

If your salary changes during the year, for example after a raise or a bonus, your employer updates the estimate and your monthly deduction changes too. The tax year in Pakistan runs from 1 July to 30 June.

The monthly deduction is adjustable. It is not always your final tax. Your final tax liability is settled when you file your income tax return. If your employer deducted more tax than you actually owed, you can claim an adjustment or refund through your return.

FBR Salary Tax Slabs 2026-27 (Tax Year 2027)

The Finance Act 2026 set the following slabs for salaried individuals. They apply from 1 July 2026 to 30 June 2027, which is Tax Year 2027. Pakistan uses a progressive system. You do not pay one flat rate on your whole salary. Each part of your income is taxed at the rate of the slab it falls in.

The most important fact for most employees is the first row. If your annual taxable income is Rs 600,000 or less, which means a monthly salary of Rs 50,000 or less, you pay no income tax at all. That tax-free limit is the starting point for working out how much tax is deducted from salary in Pakistan.

What changed compared with 2025-26:

• Tax rates were reduced in four slabs: 23% became 20%, 30% became 25%, and the old 35% slab was split into 29% and 32% bands.
• The top rate of 35% now starts only above Rs 7,000,000 a year. In 2025-26, it started above Rs 4,100,000.
• The 9% surcharge on high salaried income was abolished for salaried individuals under the Finance Act 2026. In 2025-26, a 9% surcharge applied when annual taxable income exceeded Rs 10,000,000.

Rates change with every federal budget, so always confirm the current slabs on the FBR website before relying on them for a filing.

How Much Tax Is Deducted From Your Salary in Pakistan?

Here is a worked example showing how much tax is deducted from salary in Pakistan for a monthly salary of Rs 200,000.

Step 1: Find the annual income.
Rs 200,000 x 12 = Rs 2,400,000 per year.

Step 2: Find the slab.
Rs 2,400,000 falls in the slab of Rs 2,200,001 to Rs 3,200,000.

Step 3: Apply the formula.
Tax = Rs 116,000 + 20% of the amount exceeding Rs 2,200,000.
Amount exceeding Rs 2,200,000 = Rs 2,400,000 – Rs 2,200,000 = Rs 200,000.
20% of Rs 200,000 = Rs 40,000.
Annual tax = Rs 116,000 + Rs 40,000 = Rs 156,000.

Step 4: Divide by 12 for the monthly deduction.
Rs 156,000 / 12 = Rs 13,000 per month.

Step 5: Find the take-home pay.
Rs 200,000 – Rs 13,000 = Rs 187,000 per month.

So a person earning Rs 200,000 a month pays Rs 13,000 in monthly tax and takes home Rs 187,000. That is how much tax is deducted from salary in Pakistan at this income level.

Monthly tax deduction table (2026-27)

This table assumes your full monthly salary is taxable income. In practice, your taxable income can be lower than your gross salary if some allowances are exempt under FBR rules, so your actual deduction may be slightly less. Your payslip is the final record.

Marginal Rate vs Effective Rate: A Common Misunderstanding

Many people worry when they hear a rate like 20% or 25%. They think that rate applies to their whole salary. It does not. Only the part of your income inside a slab is taxed at that slab’s rate. This is the difference between your marginal rate and your effective rate.

Take the Rs 200,000 example above. The marginal rate is 20%, because the last part of that income falls in the 20% slab. But the total tax is Rs 156,000 on an annual income of Rs 2,400,000. That is an effective rate of only 6.5%.

The same is true at higher salaries. A person earning Rs 250,000 a month has a marginal rate of 20%, but an effective rate of 9.2% (Rs 276,000 tax on Rs 3,000,000 income). This is why a salary increase never reduces your take-home pay. Only the extra income above the next threshold is taxed at the higher rate. The rest of your income keeps its lower rates.

What Your Employer Uses to Calculate Your Monthly Deduction

Your employer starts with your gross salary and then works out your taxable salary. A few things affect the final number:

• Basic salary and allowances. Your basic pay plus taxable allowances form most of your taxable income.
• Exempt allowances. Some allowances may be exempt under FBR rules, up to set limits. For example, a medical allowance provided by an employer is generally exempt up to 10% of basic salary, provided certain conditions are met. Your HR department can confirm which of your allowances are exempt.
• Bonuses. A bonus is added to your income for the year. Because your employer recalculates your estimated annual tax, a bonus month can show a higher tax deduction than a normal month.
• Provident fund and other deductions. Contributions and deductions that the law allows can reduce taxable income, depending on the rules that apply to your employment.

If any of these details are wrong in your payroll record, your monthly deduction will be wrong too. That is why it is worth checking your payslip at least once after every salary change.

How to Check the Tax on Your Payslip

Checking how much tax is deducted from salary in Pakistan on your payslip takes only a few minutes. Follow these steps:

1. Find your gross salary. This is your full monthly pay before any deduction.
2. Find the tax line. It is usually labelled as income tax, WHT, or tax deducted at source.
3. Compare it with the table above. Multiply your monthly salary by 12, find the right slab, and work out the monthly figure. Small differences can come from exempt allowances.
4. Use our Salary Tax Calculator. Enter your monthly salary in our Salary Tax Calculator to get an instant estimate and compare it with your payslip.
5. Ask HR or payroll if it does not match. If the difference is large and you cannot explain it, ask your HR department which slab and which allowances they used. They can correct the payroll record before the year ends.

Also check that your employer is using the current slabs. Some payroll systems still use the old 2025-26 rates, where the fourth slab was 23% instead of 20% and the top rate started at Rs 4,100,000. Under the old rates, a salary of Rs 200,000 a month would have shown a deduction of Rs 13,500 instead of Rs 13,000. Using the old rates would give you the wrong figure for how much tax is deducted from salary in Pakistan.

Filer vs Non-Filer: Why Filing Your Return Matters

Paying tax through your salary does not remove the need to file a return. If your annual taxable income is above Rs 600,000, you should file your income tax return through the FBR IRIS portal. Filing matters for two reasons.

First, filing settles your final tax. Your employer’s monthly deduction is an estimate based on your salary. Your return takes your full picture into account, including any other income or adjustments you are entitled to. If too much tax was deducted, you can claim it back.

Second, filer status saves you money elsewhere. People on the FBR Active Taxpayers List pay lower withholding tax on bank transactions, property purchases, vehicle registration, and cash withdrawals than non-filers. Salary tax itself follows the same slabs for everyone, but filer status reduces many other taxes you pay during the year.

If you are a salaried employee and have never filed a return, it is worth doing. Keep your payslips and your annual tax certificate from your employer safe. You will need them when you file.

How to Reduce Your Salary Tax Legally

You cannot avoid tax that the law requires, but you can make sure you only pay what is actually due. These steps are legal and simple:

• Check your payslip every month. Make sure your employer uses the current 2026-27 slabs and the correct allowances for you.
• Tell HR about every exemption you qualify for. If your employer does not know about an exempt allowance, it will not be applied.
• File your return on time. Filing lets you claim adjustments and refunds if extra tax was deducted during the year.
• Plan your salary structure with HR. Within the law, how your pay is split between basic salary and allowances can change your taxable income. Ask HR what options your organisation allows.
• Keep records. Save your monthly payslips and your annual tax deduction certificate. They are your proof if any question is raised later.

Avoid anyone who promises to remove your salary tax completely or to hide income. Tax evasion carries penalties, and your employer already reports your salary to FBR. The legal path is to pay the correct amount, nothing more.

Frequently Asked Questions