How salary tax is worked out in Pakistan
Your employer deducts income tax from each month’s salary under section 149 of the Income Tax Ordinance, 2001. The yearly tax comes from the slab your yearly taxable income falls in: a fixed amount for the slabs below plus a percentage of the part above the slab’s start. The monthly deduction is the yearly tax ÷ 12.
- The tax year runs from 1 July to 30 June and is named after the year it ends in.
- The rates are set each year in the Finance Act. NVDRA keeps this table up to date, but always confirm with the FBR or your tax advisor before filing.
- Being on the Active Taxpayers List (filing your return) lowers withholding taxes on banking, property and vehicles; it does not change salary tax.