Working out salary income tax in Pakistan is straightforward once you know the steps. Here’s the exact process, followed by a shortcut.
Step 1: Find annual taxable income
Multiply the monthly gross salary by 12. For most salaried employees this is your taxable base (before any admissible adjustments).
Step 2: Match it to the FBR slab
Find the slab your annual income falls into for the current tax year. Each slab has a fixed amount plus a rate on the excess over the slab’s lower bound.
Step 3: Apply fixed + rate
Tax = fixed amount + (rate × income above the slab’s lower bound).
Step 4: Add surcharge if applicable
If annual taxable income crosses the surcharge threshold, add the surcharge percentage to the calculated tax.
Step 5: Divide by 12
Divide the annual tax by 12 to get the monthly deduction shown on the payslip.
A quick example
For an annual taxable income of Rs 1,800,000, using the 1,200,000 – 2,200,000 band (6,000 + 11% of the excess):
- 6,000 + 11% of (1,800,000 − 1,200,000)
- = 6,000 + 11% of 600,000
- = 6,000 + 66,000 = 72,000 per year, or 6,000 per month.
The shortcut
Doing this for one person is easy; doing it for a whole team, every month, as slabs change, is not. Use the free salary tax calculator for one-off checks, or run it across your entire payroll automatically with PayTime.
