Pakistan Salary Tax Calculator 2026-27

Under section 149 of the Income Tax Ordinance, 2001, an employer deducts tax from each salary payment, at the time of payment, at the employee's average rate for the tax year. The average rate is the tax that would be payable on the estimated annual salary divided by that estimated salary (section 149(2)). Tax is therefore withheld with each monthly payment, and the employer adjusts for tax already withheld, any earlier excess or shortfall, and tax credits the employee proves with documents. Directors' fees and board meeting fees are withheld at 20% of the gross amount, and that tax is adjustable (section 149(3)).

An employee's main reliefs are a deductible allowance for Zakat paid under the Zakat and Ushr Ordinance, 1980 (section 60), a tax credit for charitable donations to approved recipients (section 61), and a tax credit for contributions to an approved pension fund under the Voluntary Pension System Rules, 2005, for people with salary or business income (section 63). Zakat and any unused allowance cannot be refunded or carried forward.

An employer files a withholding statement for each quarter (section 165): by 20 April for the quarter ending 31 March, 20 July for the quarter ending 30 June, 20 October for the quarter ending 30 September, and 20 January for the quarter ending 31 December. A statement is required even if nothing was withheld in the period. A revised statement can be filed within 60 days of the original. Section 164 requires the employer to give the employee a certificate of the tax deducted.