Tax & salary
Income tax and salary in Pakistan
Salaried tax in Pakistan is charged on annual taxable income in slabs, then deducted in equal monthly instalments by your employer. This hub explains the structure; slab rates are published for each tax year in the federal budget.
In this hub
How salary tax is applied
The mechanics are the same every year, even when the rates change.
| Step | What happens |
|---|---|
| 1. Annual taxable salary | Your gross annual salary, including most allowances. |
| 2. Slab identification | The income falls into a slab that sets a fixed amount plus a percentage on the excess. |
| 3. Annual tax | Fixed amount for the slab, plus the percentage applied only to income above the slab floor. |
| 4. Monthly deduction | Annual tax divided by twelve and withheld from each payslip. |
| 5. Return filing | You file annually to confirm the deduction and appear on the active taxpayer list. |
Tax questions
Why does only part of my salary get taxed at the higher rate?
Slabs are marginal. Crossing into a higher slab means only the income above that threshold is taxed at the higher percentage, not your whole salary.
What is the practical difference between filer and non-filer?
Filers pay lower withholding tax on banking transactions, property, vehicles and many services. Non-filers pay higher rates on the same transactions.
Do bonuses change my monthly deduction?
Yes. A bonus raises annual taxable income, so your employer usually recalculates and adjusts the remaining monthly deductions.