Running payroll in Pakistan means balancing multiple regulatory requirements at once. Without a clear system, missed deadlines or errors can lead to penalties, employee disputes, and reputational damage. This checklist helps payroll teams stay on track.

Monthly Payroll Basics

Before you process any salaries, verify that:

  • Attendance and leave records are accurate and signed off
  • Salary components (basic, allowances, deductions) match employment contracts
  • Tax withholding calculations are correct for the current tax year
  • EOBI contributions are calculated at the right rate for eligible employees
  • All statutory deductions (income tax, social security, zakat where applicable) are withheld

Run a trial payroll each month and review it with your finance or HR lead before finalising.

FBR Tax Compliance

The Federal Board of Revenue (FBR) requires employers to:

  • Withhold income tax (salary tax) at source from employee salaries
  • File monthly withholding statements on time (usually by the 15th of the following month)
  • Reconcile withheld amounts with annual tax returns
  • Maintain payroll records for at least five years
  • Issue salary certificates and tax deduction certificates (Form 'A') to employees by 31 May each year

Keep digital copies of all tax filings and correspondence. Any discrepancies between monthly and annual submissions invite audit queries.

EOBI & Deductions

Employees earning up to a defined monthly threshold are entitled to EOBI (Employees' Old-Age Benefits Institution) contributions:

  • Both employer and employee contribute a percentage of salary
  • Contributions must be remitted to EOBI within a set period each month
  • EOBI records must match your payroll ledger
  • Check eligibility annually; thresholds can change

For voluntary pension schemes or group insurance, ensure deductions are formally authorised in writing by each employee and reconciled monthly.

Record-Keeping & Documentation

Maintain a payroll folder (physical or digital) containing:

  • Signed employment contracts for all staff
  • Attendance sheets and leave approvals
  • Salary revision letters and promotion records
  • Tax registration and EOBI registration certificates
  • Monthly payroll registers and bank transfer proofs
  • Employee tax deduction certificates
  • Any correspondence with tax or EOBI authorities

Organise by calendar year and by employee. Digital storage with backup is safest.

Year-End & Annual Reporting

Before the tax year closes:

  • Complete and file annual tax returns for the company
  • Issue tax deduction certificates to all employees
  • Reconcile total salary paid against tax withheld and bank records
  • Review and file EOBI annual statements
  • Audit your payroll for any corrections needed

This is also the time to verify all employee bank account details if you plan to change the payment method.

Use Technology Wisely

Manual spreadsheets are error-prone and create compliance risk. A dedicated payroll system—whether cloud-based or in-house—should automatically:

  • Calculate withholding tax based on current FBR slabs
  • Flag employees eligible for EOBI
  • Generate month-end statements and year-end certificates
  • Store records securely and produce audit trails

Practical Takeaway

Start by creating a simple monthly checklist—assign one person ownership of each task (tax, EOBI, records, reporting). Set calendar reminders for key deadlines. If your business is growing, invest in cloud payroll software that automates calculations and compliance steps; it pays for itself in reduced errors and time saved. Review this checklist quarterly with your finance and HR teams to catch any drift before it becomes a problem.