How is income tax calculated in Pakistan?
These are the rates for salaried individuals, which apply when salary is more than 75% of taxable income. They were revised by the Finance Act, 2026 for the tax year running 1 July 2026 to 30 June 2027.
Taxable income up to PKR 600,000 is not taxed. Rates then rise in steps from 1% to 35%, with 35% on income above PKR 7,000,000. The surcharge on salary income over PKR 10 million has been abolished.
The employer withholds the tax from salary each month.
What is the income tax rate in Pakistan?
| Taxable income | Rate |
|---|---|
| PKR 0 – PKR 600,000 | 0% |
| PKR 600,000 – PKR 1,200,000 | 1% |
| PKR 1,200,000 – PKR 2,200,000 | 11% |
| PKR 2,200,000 – PKR 3,200,000 | 20% |
| PKR 3,200,000 – PKR 4,100,000 | 25% |
| PKR 4,100,000 – PKR 5,600,000 | 29% |
| PKR 5,600,000 – PKR 7,000,000 | 32% |
| Over PKR 7,000,000 | 35% |
What mandatory salary deductions apply?
- No compulsory employee contributions were found for a regular employee.
Gross salary and take-home salary
Gross salary is what your contract says before anything is taken off. Take-home salary is what reaches your bank account after income tax and the compulsory employee contributions. Employer contributions are paid on top of your salary and are not taken from it.
Example: PKR 830,000 a month
An employee earning 830,000 a month, about US$3,000.
| Item | Monthly | Annual |
|---|---|---|
| Gross salary | PKR 830,000 | PKR 9,960,000 |
| Income tax | PKR 205,000 | PKR 2,460,000 |
| Compulsory contributions | PKR 0 | PKR 0 |
| Take-home pay | PKR 625,000 | PKR 7,500,000 |
Effective income tax rate 24.7%; all deductions 24.7%.
Frequently asked questions
What is the tax-free amount for salaried people?
Taxable income up to PKR 600,000 a year.
Is there still a surcharge on high salaries?
No. The Finance Act, 2026 abolished the surcharge on salary income over PKR 10 million; it still applies to non-salaried individuals.
When does the tax year run?
From 1 July to 30 June.
Official sources
- PwC Worldwide Tax Summaries (reviewed 24 August 2026): Pakistan - Individual - Taxes on personal income. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 24 August 2026): Pakistan - Individual - Significant developments. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 24 August 2026): Pakistan - Individual - Other taxes. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 24 August 2026): Pakistan - Individual - Tax administration. Read 5 November 2026.
Last reviewed 5 November 2026. An estimate for planning, not tax advice; your employer’s payroll and the tax authority decide what is actually withheld.
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