Salary and slabs
Salary Tax Slabs in Pakistan for Tax year 2027
Salary is taxed on eight bands running from nil below Rs 600,000 to 35% above Rs 7 million. The nine percent surcharge that applied to salaried people above Rs 10 million taxable income was withdrawn by the Finance Act 2026, so the top marginal rate for tax year 2027 is a clean 35%. Your employer deducts monthly at your average rate for the year.
Where these figures come from
- Statutory basis
- Income Tax Ordinance, 2001, as amended by the Finance Act 2026, for tax year 2027 (1 July 2026 to 30 June 2027).
- Last checked against the statute
- by BarrioVibe, which files income tax returns through FBR IRIS.
These figures are an estimate computed from the rates above, not tax advice for your situation. Your return depends on facts a form cannot see, so treat the number as a starting point and speak to us before you file on it.
The bands for tax year 2027
Rendered from the same module the salary calculator computes with, so the table and the tool cannot disagree. "Tax at the floor" is the cumulative amount owed at the bottom of the band, before the rate applies to anything above it.
| Annual taxable income | Rate on the excess | Tax at the floor |
|---|---|---|
| Up to Rs 600,000 | Nil | - |
| Rs 600,001 to Rs 1,200,000 | 1% | - |
| Rs 1,200,001 to Rs 2,200,000 | 11% | Rs 6,000 |
| Rs 2,200,001 to Rs 3,200,000 | 20% | Rs 116,000 |
| Rs 3,200,001 to Rs 4,100,000 | 25% | Rs 316,000 |
| Rs 4,100,001 to Rs 5,600,000 | 29% | Rs 541,000 |
| Rs 5,600,001 to Rs 7,000,000 | 32% | Rs 976,000 |
| Above Rs 7,000,000 | 35% | Rs 1,424,000 |
What it comes to on your salary
Enter a monthly or annual figure. The calculator shows the working slab by slab, so you can check it against the table above rather than take it on trust.
Salary Tax CalculatorWhat changed this year
Two genuinely new intermediate bands appeared, at 29% and 32%, taking the table from six bands to eight. The effect is to soften the jump that used to happen between the middle and the top of the scale.
The threshold for the top 35% rate moved from Rs 4.1 million to Rs 7 million. Together with the withdrawal of the surcharge, a salaried person on a high income pays materially less than they did last year, which is unusual enough to be worth stating plainly.
The same income, taxed two ways
The gap between employment and self-employment widened this year, because salaried rates fell and the business table did not move at all. These are the figures on identical taxable income.
| Taxable income | As salary | As business income |
|---|---|---|
| Rs 1,200,000 | Rs 6,000 | Rs 90,000 |
| Rs 2,200,000 | Rs 116,000 | Rs 350,000 |
| Rs 3,200,000 | Rs 316,000 | Rs 650,000 |
| Rs 5,600,000 | Rs 976,000 | Rs 1,610,000 |
Why the difference is so large at the bottom
At the first taxable band the salaried rate is one percent and the business rate is fifteen. On the first Rs 600,000 of taxable income above the exemption, an employee pays Rs 6,000 and a sole trader pays Rs 90,000 on the same money.
That is not an argument for anything, and it is certainly not an argument for mischaracterising freelance income as salary. It is a reason to know which table applies to you before you plan around a number you read somewhere.
How your employer works out the monthly deduction
Under section 149 an employer deducts at your average rate of tax for the year, computed on estimated salary income, rather than applying the top band to each month. That is why the monthly figure on a payslip rarely matches a naive slab calculation.
The employer is also required to adjust for tax already withheld under other heads and for credits admissible under sections 61 and 63, but only on being given documentary evidence. If you contribute to an approved pension fund or make eligible donations and never hand payroll the paperwork, the benefit does not disappear, it simply waits until you file and claim it in the return.
What a salaried person can still claim
Fewer than most guides suggest, and worth knowing precisely.
- Section 63, contributions to an approved pension fund. The credit is calculated on the lesser of the contribution or twenty percent of taxable income, with an enhanced allowance for people who joined after age forty.
- Section 61, charitable donations to eligible recipients including boards of education, universities, government-run institutions and listed non-profits.
- Section 60D, education expenses, only where taxable income is below Rs 1.5 million, capped at the lesser of five percent of tuition paid, twenty-five percent of taxable income, or Rs 60,000 per child.
- Zakat deducted at source under the Zakat and Ushr Ordinance.
Checking your payslip against the table
Take your annual gross, subtract anything genuinely exempt, and read the band. Divide the resulting figure by twelve and compare it with what payroll is deducting. A small difference is normal, because the average-rate method smooths the year.
A large difference is worth a question, and there is one specific reason it might arise this year: any payroll still deducting the nine percent surcharge from a salaried employee is over-deducting, because that surcharge was withdrawn. You would get it back on filing, but you would have lent it to the government for a year first.
Questions
The questionspeople ask
What are the salary tax slabs in Pakistan for tax year 2027?
Eight bands. Nothing up to Rs 600,000, then 1% to Rs 1.2 million, 11% to Rs 2.2 million, 20% to Rs 3.2 million, 25% to Rs 4.1 million, 29% to Rs 5.6 million, 32% to Rs 7 million, and 35% above that. Each band applies only to the amount above its floor, with a fixed cumulative figure carried forward.
Is there still a surcharge on high salaries in Pakistan?
Not for salaried people. Section 4AB was inserted at ten percent by the Finance Act 2024, reduced to nine percent for salaried persons by the Finance Act 2025, and withdrawn for salaried persons entirely by the Finance Act 2026. Ten percent still applies to other individuals and associations of persons above Rs 10 million taxable income.
What is the highest rate of income tax on salary in Pakistan?
35%, on taxable income above Rs 7 million. With the surcharge withdrawn, that is also the top effective marginal rate. Last year the same person faced 35% plus a nine percent surcharge on the tax.
At what salary do I start paying income tax in Pakistan?
Above Rs 600,000 of annual taxable income, which is Rs 50,000 a month. The first band above that is charged at one percent of the excess, so tax rises very gradually at first.
Do the salaried slabs apply if I also have freelance income?
Only if salary exceeds seventy-five percent of your taxable income. Below that threshold the non-salaried table applies, and its rates are considerably higher at every band.
Why is the tax on my payslip different from the slab calculation?
Because section 149 requires your employer to deduct at your average rate of tax for the year on estimated salary income, not to apply the top band to each month. The employer should also adjust for credits under sections 61 and 63, but only if you have given them documentary evidence.
Can I still claim tax relief on a house loan in Pakistan?
No. Section 60C, the deductible allowance for profit on debt, was omitted by the Finance Act 2022, as was section 62A for health insurance. Pages listing either as available are out of date.
Why does a business owner pay more tax than a salaried person on the same income?
Because they are different tables. Division I of the First Schedule sets one rate table for salaried individuals and another for everyone else, and the Finance Act 2026 reduced the salaried rates while leaving the business rates unchanged. On Rs 5.6 million the figures are Rs 976,000 and Rs 1,610,000.
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