On this page 9 sections
- Income Tax on Salary at a Glance
- The 2026-27 Salary Tax Slabs in Pakistan
- What Changed from 2025-26
- How to Calculate Your Tax in 3 Steps
- Worked Examples: Rs 50,000 to Rs 500,000 a Month
- What Counts as Taxable Salary
- How Tax Is Deducted from Your Salary in Pakistan
- Mistakes to Avoid
- Frequently Asked Questions
Income tax on salary in Pakistan for 2026-27 starts at zero up to Rs 600,000 a year, then rises in eight progressive bands to 35% above Rs 7,000,000 a year. Your employer deducts it monthly from your salary, and there is no surcharge on salary income this year.
Here is the full FBR slab table for tax year 2027, the changes from last year, worked examples from Rs 50,000 to Rs 500,000 a month, what counts as taxable salary, and how the deduction appears on your pay. Government employees pay tax under the same salaried schedule as everyone else.
Income Tax on Salary at a Glance#
| Item | Detail |
|---|---|
| Tax year | 2027: 1 July 2026 to 30 June 2027 |
| Law | Income Tax Ordinance, 2001, First Schedule, Part I, Division I, as substituted by the Finance Act 2026 |
| Tax-free limit | Rs 600,000 a year (Rs 50,000 a month) |
| Rates | 0% to 35%, progressive by band |
| Surcharge | None on salary income in 2026-27 |
| How it is paid | Employer deducts it monthly at source (Section 149) |
The 2026-27 Salary Tax Slabs in Pakistan#
The salaried schedule applies where salary is more than 75% of your total taxable income. Find your annual taxable salary in the first column, then apply the fixed amount plus the rate on the amount above the band’s lower limit.
| Annual taxable salary | Tax |
|---|---|
| Up to Rs 600,000 | 0% |
| Rs 600,001 to Rs 1,200,000 | 1% of the amount above Rs 600,000 |
| Rs 1,200,001 to Rs 2,200,000 | Rs 6,000 + 11% of the amount above Rs 1,200,000 |
| Rs 2,200,001 to Rs 3,200,000 | Rs 116,000 + 20% of the amount above Rs 2,200,000 |
| Rs 3,200,001 to Rs 4,100,000 | Rs 316,000 + 25% of the amount above Rs 3,200,000 |
| Rs 4,100,001 to Rs 5,600,000 | Rs 541,000 + 29% of the amount above Rs 4,100,000 |
| Rs 5,600,001 to Rs 7,000,000 | Rs 976,000 + 32% of the amount above Rs 5,600,000 |
| Above Rs 7,000,000 | Rs 1,424,000 + 35% of the amount above Rs 7,000,000 |
The system is progressive. Each slice of your salary is taxed at its own band’s rate. A salary of Rs 300,000 a month is not taxed at 25%. Only the slice above Rs 3,200,000 a year is taxed at 25%, and the lower slices are taxed at 0%, 1%, 11% and 20%.
What Changed from 2025-26#
The tax-free limit is unchanged at Rs 600,000 a year. The 1% and 11% bands are also unchanged.
| Band | 2025-26 | 2026-27 |
|---|---|---|
| Rs 2.2m to Rs 3.2m | 23% | 20% |
| Rs 3.2m to Rs 4.1m | 30% | 25% |
| Above Rs 4.1m | 35% flat | 29% to 32%, then 35% above Rs 7m |
| Surcharge on salary | 9% above Rs 10m | None |
Anyone earning under Rs 2,200,000 a year pays the same as last year. The cuts start at Rs 2.2m. Above Rs 4.1m, the old single 35% band is now split: 29% from Rs 4.1m to Rs 5.6m, 32% from Rs 5.6m to Rs 7m, and 35% only above Rs 7m.
The 9% surcharge on salary income is gone. It was charged under section 4AB on taxable income above Rs 10,000,000. The Finance Act 2026 withdrew it for salary income. Do not apply any surcharge to a salary calculation for 2026-27.
How to Calculate Your Tax in 3 Steps#
Step 1: work out your annual taxable salary. Multiply your monthly taxable salary by 12. Taxable salary is not always the same as gross salary. What counts is explained below.
Step 2: apply the slab. Find your band in the table above. Take the fixed amount for that band and add the rate on the amount above the band’s lower limit.
Step 3: divide by 12. Your employer deducts the annual tax in 12 equal monthly parts. Annual tax divided by 12 is your monthly deduction.
Know your two rates. The marginal rate is the rate on your top slice of salary. The effective rate is your total tax divided by your total salary. For a Rs 300,000 monthly salary, the marginal rate is 25% but the effective rate is only 11.6%, because most of the salary is taxed at lower rates.
Worked Examples: Rs 50,000 to Rs 500,000 a Month#
Every example below assumes the monthly figure is taxable salary. Annual tax divided by 12 is the monthly deduction. Take-home pay is the monthly salary minus the monthly tax.
| Monthly salary | Annual salary | Tax per year | Tax per month | Take-home |
|---|---|---|---|---|
| Rs 50,000 | Rs 600,000 | Rs 0 | Rs 0 | Rs 50,000 |
| Rs 100,000 | Rs 1,200,000 | Rs 6,000 | Rs 500 | Rs 99,500 |
| Rs 150,000 | Rs 1,800,000 | Rs 72,000 | Rs 6,000 | Rs 144,000 |
| Rs 200,000 | Rs 2,400,000 | Rs 156,000 | Rs 13,000 | Rs 187,000 |
| Rs 250,000 | Rs 3,000,000 | Rs 276,000 | Rs 23,000 | Rs 227,000 |
| Rs 300,000 | Rs 3,600,000 | Rs 416,000 | Rs 34,667 | Rs 265,333 |
| Rs 500,000 | Rs 6,000,000 | Rs 1,104,000 | Rs 92,000 | Rs 408,000 |
Example: Rs 100,000 a month. Annual salary is Rs 1,200,000. The first Rs 600,000 is tax-free. The remaining Rs 600,000 is taxed at 1%, which is Rs 6,000 a year, or Rs 500 a month. Take-home pay is Rs 99,500.
Example: Rs 300,000 a month. Annual salary is Rs 3,600,000. The band is Rs 3.2m to Rs 4.1m, so the tax is Rs 316,000 plus 25% of the Rs 400,000 above Rs 3,200,000, which is Rs 100,000. Total tax is Rs 416,000 a year, or Rs 34,667 a month. Take-home pay is Rs 265,333.
BPS-17 example. A BPS-17 officer’s gross pay is about Rs 110,000 a month, or Rs 1,320,000 a year. If the whole amount were taxable, the tax would be Rs 6,000 plus 11% of Rs 120,000, which is Rs 19,200 a year, or Rs 1,600 a month. In practice the real taxable pay is different, because some allowances are treated differently. The BPS-17 pay breakdown shows the full basic pay, allowances and gross salary. For the other grades, see our BPS-11 salary guide and BPS-14 salary guide.
What Counts as Taxable Salary#
Section 12 of the Income Tax Ordinance, 2001 defines salary as basic pay plus allowances, bonus, commission, overtime and perquisites with a monetary value. Basic pay is fully taxable, with no exemption.
Cash allowances are taxable. House rent allowance paid in cash is fully taxable. Conveyance allowance is fully taxable under Section 12. See the 2026 conveyance allowance rates by BPS group.
Medical allowance is not settled. Whether a cash medical allowance is fully taxable or exempt up to 10% of basic salary is not settled. Do not assume either one. Medical treatment actually provided or reimbursed by the employer is treated differently from a cash allowance. Check the current treatment with your DDO or a tax adviser before you rely on it.
Taxable income is equal to or less than gross salary, never more. That is why the worked examples above say taxable salary. If you enter your gross salary into a calculator, treat the result as an estimate that ignores exemptions.
Your basic pay comes from your BPS scale. Our BPS pay scale chart 2026 gives the minimum and maximum basic pay for every scale from BPS-1 to BPS-22.
How Tax Is Deducted from Your Salary in Pakistan#
Section 149 requires every employer to deduct tax at source from salary at the time of payment. The employer estimates your annual liability, divides it by 12, and deducts that amount each month.
The deduction shows on your salary slip. Your monthly tax deduction and your GP Fund deduction both appear on the slip. Our salary slip guide explains how to download your slip and read every line.
Your monthly deduction can change during the year. If your salary changes, or an allowance starts or stops, the employer re-estimates the annual liability and the monthly deduction changes with it.
Mistakes to Avoid#
Using a flat rate. Nobody pays “20% tax on salary”. The system is progressive, so only the top slice is taxed at the top rate. Always work out the marginal rate and the effective rate separately.
Using last year’s slabs. The 2025-26 rates were 23% and 30%, a single 35% band above Rs 4.1m, and the 9% surcharge. All three are out of date for 2026-27.
Adding a surcharge to salary. The 9% surcharge is withdrawn for salary income. A 10% surcharge still applies to non-salaried individuals above Rs 10m, but that is a different schedule and does not apply here.
Do not enter gross salary as taxable salary without thinking. Exemptions and the treatment of allowances change the taxable figure. If you are not sure of your taxable salary, ask your DDO or use your last salary slip as the starting point.
Do not trust a calculator that hides its slabs. Any salary tax calculator should show the FBR slabs it uses and the year they apply to. If it shows 23%, 30% or a surcharge, it is using last year’s rules. The official rates are on the FBR website.
Frequently Asked Questions#
How much tax is deducted from a 100,000 salary?
Rs 500 a month. A salary of Rs 100,000 a month is Rs 1,200,000 a year. The first Rs 600,000 is tax-free, and the remaining Rs 600,000 is taxed at 1%, which is Rs 6,000 a year or Rs 500 a month. Take-home pay is Rs 99,500.
Is conveyance allowance taxable?
Yes, conveyance allowance received in cash is fully taxable under Section 12 of the Income Tax Ordinance, 2001. The Second Schedule, Part I, Clause 39 specifically excludes it from the exemption. Conveyance allowance in 2026 is Rs 2,678 a month for BPS 1-4, Rs 2,898 for BPS 5-10, Rs 4,284 for BPS 11-15, and Rs 7,500 for BPS 16 and above.
What is the tax-free limit for salary in 2026-27?
Rs 600,000 a year, which is Rs 50,000 a month. Salary up to that amount is taxed at 0%. The limit is unchanged from 2025-26.
Is there a surcharge on salary in 2026-27?
No. The 9% surcharge on taxable income above Rs 10,000,000 was withdrawn for salary income by the Finance Act 2026. A 10% surcharge still applies to non-salaried individuals and associations of persons above Rs 10m, but it does not apply to salary.
How is income tax deducted from salary?
Under Section 149 of the Income Tax Ordinance, 2001, your employer must deduct tax at source when salary is paid. The employer estimates your annual tax liability from the FBR slabs, divides it by 12, and deducts that amount each month. The deduction appears on your salary slip. Tax deducted at source does not make you a filer. Our FBR Active Taxpayer List guide explains how to check your filer status by CNIC and why it matters for bank profit, property and vehicles.
