How Salary Tax Is Calculated in Pakistan — and How to Check Your Payslip

Every year the Finance Act resets Pakistan’s salary tax slabs, and every year employees ask the same questions: How much tax should I be paying? Why did my deduction change? Can I get some of it back? This guide explains the mechanics so you can check the numbers yourself.

The tax year

Pakistan’s tax year for individuals runs from 1 July to 30 June. “Tax Year 2026”, for example, is the year ending 30 June 2026. Salary tax for that year is calculated on your total taxable salary across those twelve months.

How the slabs work

Salary tax is progressive. Each slab in the Finance Act has two parts:

1. a fixed amount of tax covering all income in the lower slabs, and
2. a percentage applied only to the income that falls inside your slab.

So moving into a higher slab never means your whole salary is taxed at the higher rate — only the portion above the slab threshold is. Your effective rate (total tax ÷ total income) is always lower than your top slab rate.

Worked structure: if your annual salary falls in a slab that starts at threshold T with fixed amount F and rate r, your annual tax is:

Tax = F + r × (Salary − T)

Our free FBR salary tax calculator applies the current slabs and shows your annual liability, monthly deduction, effective rate and the slab you fall in.

Why your employer deducts tax every month

Under section 149 of the Income Tax Ordinance 2001, employers must withhold tax from salary each month. They estimate your total salary for the tax year, calculate the annual tax on it, and spread it across the remaining months. That is why:

• a mid-year raise or bonus pushes your deduction up for the rest of the year, and
• the deduction in June is often different, as your employer trues up the year.

Your employer should issue an annual certificate of tax deducted — keep it, because you will need it for your return.

Filers and non-filers

Being on FBR’s Active Taxpayer List (ATL) matters even if all your income is salary. Non-filers pay substantially higher withholding tax on many everyday transactions — bank cash withdrawals, vehicle registration, property transfers, dividends and more. Look up the difference for specific payments with our WHT rate finder.

To stay on the ATL, file your annual return by the due date — for individuals, 30 September following the end of the tax year, unless FBR extends it.

When too much tax was deducted

Withholding is an estimate, so it can overshoot — for example if you changed jobs and both employers deducted tax as if each salary were your only income, or if you have deductible allowances your employer did not account for. Tax withheld from salary is adjustable: it is credited against your final liability when you file your return, and any excess can be claimed as a refund through the return.

A quick payslip check

1. Add up your expected taxable salary for the full tax year (excluding exempt allowances).
2. Run it through the salary tax calculator.
3. Compare the monthly figure with the tax on your payslip.

If the difference is large and unexplained, raise it with your employer’s payroll team early — it is far easier to correct in the middle of the year than after June.

Need help filing your return or claiming a refund? Our tax filing service handles it end to end.