Every year around end of June, the same thing happens in Pakistani offices. Finance announces the new budget. The HR person opens a calculator. Three or four WhatsApp groups light up with "yaar new tax slabs aagaye, share karo." And by 1 July, half the payroll runs in the country are using last year’s numbers because nobody has had time to read the actual Finance Act yet.
So — let’s save you that hour. Below are the salary tax slabs for the financial year 1 July 2026 to 30 June 2027, explained the way you’d explain them to a colleague over chai. With real PKR examples. And the small mistakes that make FBR phone calls in October a lot more unpleasant than they need to be.
The headline: slabs are slightly easier this year
The FY 2026-27 budget kept the salaried tax structure largely the same as 2025-26, but with a couple of welcome cuts in the middle. The big picture: if you earn under PKR 50,000 a month, you still owe zero. If you earn between PKR 1.2 million and 3.2 million a year, you’re paying noticeably less than you were two years ago. If you earn over 5.6 million, the rate goes up — but not as sharply as before.
Here are all seven brackets:
- 0% — Up to PKR 600,000 annual (50,000/month). Tax-free.
- 1% — 600,001 to 1,200,000. Just 1% on the amount over 600,000.
- PKR 6,000 + 11% — 1,200,001 to 2,200,000. Fixed amount plus 11% on the excess over 1.2M.
- PKR 116,000 + 20% — 2,200,001 to 3,200,000.
- PKR 316,000 + 25% — 3,200,001 to 4,100,000.
- PKR 541,000 + 29% — 4,100,001 to 5,600,000.
- PKR 976,000 + 32% — 5,600,001 to 7,000,000.
Above 7 million, the top marginal rate applies on the rest. And the 10% surcharge on tax payable (for incomes above PKR 10M) is still very much alive in 2026-27 — it didn’t go away in the budget despite a lot of pre-budget speculation that it would.
One honest disclaimer: tax rules in Pakistan change all the time via follow-up SROs. The slabs above match the FY 2026-27 federal budget. Before you finalise anyone’s annual return, run it past your tax consultant or pull the latest from the FBR website. Software is great but the law is the law.
Now let’s look at real salaries
Slabs are abstract. People earn real numbers. So here’s what the math looks like for five common Pakistani salaries.
If you earn PKR 50,000 a month (600,000 a year)
You sit exactly at the threshold. Annual tax: zero. Monthly deduction: zero. Take home equals gross. Enjoy it — this is rare in Pakistan.
If you earn PKR 100,000 a month (1,200,000 a year)
You’re at the top of Slab 2. The math is: 1% of (1,200,000 minus 600,000) = 1% of 600,000 = PKR 6,000 a year. That’s PKR 500 deducted from your payslip every month. Two years ago that same salary was paying close to PKR 30,000 a year in tax. This is the bracket where the salaried class genuinely got relief.
If you earn PKR 200,000 a month (2,400,000 a year)
Now you’re in Slab 4. The fixed component is 116,000 and the rest is 20% of whatever you earn above 2.2M. So: 116,000 + 20% of 200,000 = 116,000 + 40,000 = PKR 156,000 a year. Monthly deduction: PKR 13,000. Your take-home becomes about 187,000.
If you earn PKR 400,000 a month (4,800,000 a year)
Slab 6 territory. Fixed: 541,000. Plus 29% of the 700,000 above 4.1M = 203,000. Total tax: PKR 744,000 a year. That’s PKR 62,000 deducted every month. Your "400K salary" is really PKR 338,000 take-home. Most people don’t realise this until they see the first August payslip.
If you earn PKR 600,000 a month (7,200,000 a year)
Just above Slab 7. The math gets a little more involved because the top marginal rate kicks in on the part above 7M, and at this income level you also need to watch the 10% surcharge if you cross 10M with bonuses. Rough calculation: about PKR 1,500,000 a year in tax, monthly deduction north of PKR 125,000. At this salary range, please don’t use Excel formulas. Use proper payroll software, or you’ll spend the year-end fixing differences.
Section 149: the rule that catches small employers off-guard
Here’s the part nobody enjoys but everyone has to handle. Section 149 of the Income Tax Ordinance, 2001 says that whoever pays the salary — you, the employer — must deduct the tax before handing over the money. Not at the end of the year. Not when the employee files their return. Every single month, on every single salary payment.
The arithmetic is simple: figure out the employee’s annual tax using the slabs above, divide by 12, deduct that much each month, and deposit it to FBR via the IRIS portal by the 15th of the following month. Miss the 15th and you’re looking at a default surcharge of about 12% per annum on the unpaid amount, plus the possibility of a penalty from your tax officer.
The trickier part: salaries don’t stay constant. Someone gets a promotion in October. Someone takes 15 days of unpaid leave in March. Someone joins on the 18th of a month and you have to figure out half a month’s pay. Each of these changes the employee’s estimated annual income, which means the remaining months need to be re-balanced so the total deducted by year-end matches the actual tax due. If you don’t re-balance, you either over-deduct (and the employee complains) or under-deduct (and they get a fat refund bill from FBR in October).
Five things almost everyone gets wrong
I’ve seen these come up so many times that it’s worth saying out loud:
1. People apply the slabs to gross salary instead of taxable salary. Recognised provident fund contributions, the medical allowance (up to 10% of basic), zakat deductions, and qualifying charitable donations all come off the salary before you apply the brackets. If you skip this, you over-tax the employee — and they will eventually notice.
2. People don’t pro-rate joiners and leavers. An employee who joins on 1 October has 9 months of salary that year, not 12. Their annual taxable income is 9 × monthly, not 12 × monthly. Calculating on the full 12 pushes them into the wrong bracket and over-deducts. Same for people who leave mid-year.
3. People forget about the surcharge. The 10% surcharge on tax payable applies above PKR 10M annual income. It’s a small group of employees but the absolute amount is large, so missing it is expensive.
4. People dump the whole year’s bonus into one month. If someone gets a PKR 800,000 Eid bonus in March, you can’t just calculate that month’s tax in isolation — it’ll look like they earned a salary that puts them in a stratospheric bracket. The right approach: treat the bonus as part of estimated annual income from the moment you know about it, and re-balance the remaining months.
5. People miss the Form 16 deadline. By 15 July each year, every employee needs a salary tax certificate (commonly called Form 16) summarising what they earned and what was deducted. Without it, they can’t file their own return. Missing this deadline exposes the employer to penalty proceedings.
Honestly, this is why we built the payroll module
Revebe Digital’s POS already runs the sales, inventory and accounts side of Pakistani businesses. But around late 2025, almost every customer asked the same question: "Can you also do payroll? Because Excel is killing us."
So we built it. The HR & Payroll module inside Revebe is specifically tuned for how Pakistani companies actually work. Here’s what runs by itself when you click "Run Payroll" each month:
- The FY 2026-27 FBR slabs are pre-loaded. You can edit them the moment a new SRO comes out — without waiting for a software update.
- Provident fund contributions, medical allowance, zakat and qualifying donations are removed from taxable salary before the slabs are applied.
- Joiners and leavers are pro-rated on actual working days. No more "but he only worked 8 days" disputes.
- Unpaid leave is automatically pulled from attendance, applied to gross, and the tax recalculates.
- Staff loan installments are deducted from each payslip per the approved loan schedule — no manual tracking spreadsheets.
- Bonuses and increments re-balance tax across the rest of the year so December doesn’t suddenly become tax-pocalypse for someone who got an Eid bonus.
- The Section 149 monthly challan figure is ready to deposit on the 15th, exported with a single click in the format IRIS accepts.
- Bank transfer letters are generated on letterhead, listing every employee’s net salary — in the layout Pakistani banks actually accept.
- PDF payslips go out in the standard Pakistan format (basic + allowances minus deductions = net).
- Provident fund automatically starts on the employee’s confirmation date, not joining date — with the first month pro-rated correctly.
If you’ve been doing payroll for 20+ employees in Excel — or worse, in QuickBooks plus three other tools — you can book a free demo and we’ll show you the same payroll cycle running in 15 minutes instead of two days. The slabs in the screenshot at the top of this article? Those are the actual values pre-configured in Revebe Digital for 2026-27.
Print this and put it on the wall
A quick-reference card for whoever runs payroll at your company:
- Tax year: 1 July 2026 to 30 June 2027
- Tax-free salary: PKR 600,000 annual / PKR 50,000 monthly
- Monthly deposit deadline: 15th of the following month (via IRIS)
- Late deposit: ~12% per annum default surcharge plus penalty exposure
- Form 16 to employees: by 15 July 2027
- Individual filing deadline: typically 30 September 2027 (salaried often 31 October with extension)
- Highest marginal rate: 32% within slab 7 (5.6M to 7M); top rate above plus 10% surcharge over 10M
FAQ
What is the tax-free salary limit in Pakistan for 2026-27? PKR 600,000 a year, or PKR 50,000 a month. Anyone earning at or below this owes zero salary tax to FBR.
How is salary tax actually calculated? Pakistan uses slab-based progressive taxation. You find which bracket your annual taxable income falls into, then your tax equals the fixed amount printed for that slab plus a percentage applied to whatever you earn above the slab’s starting point. So someone earning 2.4M annually pays 116,000 plus 20% of (2,400,000 minus 2,200,000) = 156,000 a year.
When does the FY 2026-27 tax year start in Pakistan? Pakistan’s tax year runs from 1 July to 30 June. FY 2026-27 began on 1 July 2026 and ends on 30 June 2027. The new slabs apply to salary paid during this window.
How often do employers have to deposit tax to FBR? Every month. Whatever tax you deduct from salary in a given month must be deposited via FBR’s IRIS portal by the 15th of the following month. Late deposits attract roughly 12% per annum default surcharge plus possible penalty.
Is the 10% surcharge still applicable in 2026-27? Yes. The 10% surcharge on income tax payable for higher earners (above PKR 10 million annual income) continues in FY 2026-27. It was not removed in this year’s federal budget. Cross-check with the latest FBR SRO before finalising large returns.
Can Revebe Digital handle Pakistan payroll tax automatically? Yes. Revebe’s HR & Payroll module comes with the FBR slabs pre-configured, handles provident fund and medical allowance deductions before the slab calculation, pro-rates joiners and leavers, manages staff loans, generates bank transfer letters and payslips in standard Pakistani formats, and produces a Section 149 challan figure ready to deposit. Book a free demo to see it on a real payroll.
Where can I find the official Pakistan tax slab notification? The Federal Board of Revenue (FBR) website publishes the Finance Act and all subsequent SROs. Your tax consultant should keep certified copies on file for audit support.
Last updated: 28 June 2026. Reflects the salary tax structure announced in the FY 2026-27 federal budget. Always confirm with the latest FBR SRO before finalising annual returns.