Calculating Income Tax on Salaries in Pakistan – FAQ 2025
Calculation of Income Tax on Salaries in Pakistan in TY 2025
Calculating income tax on salaries in Pakistan in 2025 involves understanding the revised tax slabs introduced by the government. According to the latest guidelines, individuals earning up to Rs. 6 million annually will face a tax obligation based on their income brackets, with higher earners paying more. For example, those making between Rs. 6 million and Rs. 12 million annually will experience an increase in tax liability, typically around Rs. 22,000.
The government has kept the income tax exemption threshold at Rs. 600,000, ensuring that lower-income individuals remain unaffected. However, for salaried individuals earning above Rs. 100,000 per month, the tax responsibility has risen, with deductions now amounting to Rs. 2,500 instead of Rs. 1,250. Staying compliant as a filer offers numerous advantages, and with the help of Taxocrate’s expert consultants, you can easily calculate and file your taxes accurately.
Tax Return Filing for Salaried Individuals in Pakistan
Tax Year and Filing Period
The tax year in Pakistan runs from July 1 to June 30, aligning with the fiscal year. Salaried individuals are required to file their income tax returns and wealth statements for the fiscal year by September 30. Late submission can result in penalty proceedings.
Filing Tax Returns and Wealth Statements
Salaried individuals must file their income tax return annually with the Federal Board of Revenue (FBR). Alongside the return, residents must submit a wealth statement in the prescribed format. The wealth statement provides details of assets and liabilities and is a mandatory requirement for every taxpayer filing an income tax return.
If a taxpayer wishes to revise a previously filed return or wealth statement, they must seek approval from the Commissioner. Revisions are allowed only for correcting genuine errors or omissions. The Commissioner has the authority to deny revisions if they believe the changes are not bona fide. Revisions to wealth statements can be made up to five years after filing.
Foreign Income and Assets Declaration
Residents with foreign income exceeding USD 10,000 or foreign assets valued at USD 100,000 or more must file a separate statement of foreign income and assets. The Commissioner may also direct any individual to furnish this statement when necessary.
Withholding and Advance Tax
Employers withhold income tax directly from employees’ salaries, using the average tax rate applied to the employee’s estimated annual income. This ensures compliance without requiring salaried individuals to pay taxes separately.
Non-salaried individuals with taxable income exceeding PKR 1 million must pay advance tax in four installments throughout the fiscal year.
Statute of Limitations and Audits
Tax authorities have up to five years to conduct audits on filed tax returns. However, individuals whose returns have already been audited in the preceding four tax years are generally exempt from another audit. Amendments to tax assessments can still be made, provided the authorities issue a show cause notice and finalize the amendment order within 180 days.
The FBR also focuses on identifying unexplained offshore assets and foreign-source income, with no time limitations for probing these matters.
Focus Areas for Tax Authorities
While the FBR prioritizes the scrutiny of taxpayers with complex or non-salaried income sources, salaried individuals generally receive less attention unless specific compliance issues arise.
Simplified Filing for Salaried Individuals
The Federal Board of Revenue is working on designing customized tax return forms for different taxpayer categories, including salaried individuals. This streamlining effort aims to reduce complexities and encourage compliance.
Why Timely Filing is Important
Filing your income tax return and wealth statement on time ensures you remain compliant with tax laws, avoid penalties, and contribute to national development. For salaried individuals, the process is relatively straightforward, as employers handle withholding tax. Nonetheless, timely and accurate filing safeguards you against unnecessary legal issues and facilitates financial transparency.
Income Tax on Salary in Pakistan: A Guide for Citizens and Businesses
Income tax is a direct type of tax levied by all governments on the income generated by citizens and businesses. For direct taxes, Pakistan has the Income Tax Ordinance 2001, which is administered by the Federal Board of Revenue (FBR). Under this ordinance, the central government is responsible for collecting this tax. The government has the authority to adjust income slabs and tax rates every year in its Annual Budget. Pakistan’s tax law considers the period from 1st July to 30th June to be the normal fiscal year. You can find all the information you need here on how to calculate income tax on salary in Pakistan.
The Role of Income Taxes in Supporting Public Services and Corporate Obligations
As a result of income taxes, governments can fund public services, pay their obligations, and provide goods for citizens. Income doesn’t just refer to salary income. In addition, it includes rents from houses, shops, and profits from businesses, plus bonuses, capital gains, and income from other sources. Since 2019, the Corporate Income Tax rate is 29%, while the corporate tax rate for the Banking Sector is 35%. Other income taxes are also applicable, including the Super Tax, the Minimum Tax, and the Tax on Undistributed Reserves.
According to the Income Tax Ordinance of 2001, your salary is divided into the following categories:
- Basic Salary
- House Rent Allowance (HRA)
- Conveyance Allowance
- Medical and Other Allowances
Calculating Income Tax on Salary
How to Use Income Tax Calculators?
For those finding it challenging to calculate their income tax, various organizations and online platforms now offer income tax calculators. These tools are designed based on the latest data provided by the Federal Board of Revenue (FBR) and calculate taxes accurately according to the applicable tax slabs.
Here’s a step-by-step guide to using a salary tax calculator:
- Search for a Tax Calculator: Use search terms such as “Salary Tax Calculator Pakistan,” “Pakistan Tax Calculator for Salary,” “Income Tax Calculator 2024-25 Pakistan,” or similar queries in your preferred search engine.
- Select a Reliable Platform: Choose a trusted website from the search results that provides an up-to-date tax calculator.
- Input Your Salary: Enter your monthly or annual salary in the specified field on the calculator.
- View Tax Amount: The calculator will instantly display the total tax amount payable based on your input and the applicable tax slab.
NUTSHELL
Tax deductions are generally made on a monthly basis, though additional withholding taxes or other levies may apply depending on service usage, contracts, or the taxpayer status of the vendor.
By referring to the latest tax slabs and following the straightforward process of using a salary tax calculator, individuals can effortlessly determine the amount of tax payable on their income. This ensures compliance and accurate financial planning.
Here’s what you need to know about tax slabs for FY 2024-25:
The FBR has established tax slabs for salaried individuals for the fiscal year 2024-2025.
Notably, the FBR has raised the tax rate to 5% for individuals earning an annual income between Rs. 600,000 and Rs. 1,200,000.
Despite this adjustment, the number of tax slabs remains unchanged at six, further adding to the financial strain on the already inflation-hit salaried class.
Outlined below are the recent changes introduced through the Finance Act 2024 that will affect salaried individuals:
For the tax year 2024-2025 in Pakistan, the income tax slabs for salaried persons are as follows:
- No tax on income up to PKR 600,000.
- For income between PKR 600,001 and 1,200,000, the tax rate is 5%.
- For income between PKR 1,200,001 and 2,400,000, the tax rate is 10%.
- For income between PKR 2,400,001 and 3,600,000, the tax rate is 15%.
- For income between PKR 3,600,001 and 6,000,000, the tax rate is 20%.
- For income between PKR 6,000,001 and 12,000,000, the tax rate is 25%.
- For income between PKR 12,000,001 and 30,000,000, the tax rate is 30%.
- For income above PKR 30,000,000, the tax rate is 35%.
Please note that these slabs are subject to any applicable changes or updates by the Federal Board of Revenue (FBR).
You can see these slabs in the below table:
| Taxable Income | Rate of Tax |
| Where taxable income does not exceed Rs. 600,000 | 0% |
| Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000 | 5% of the amount exceeding Rs. 600,000 |
| Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,200,000 | Rs. 30,000 + 15% of the amount exceeding Rs. 1,200,000 |
| Where taxable income exceeds Rs. 2,200,000 but does not exceed Rs. 3,200,000 | Rs. 180,000 + 25% of the amount exceeding Rs. 2,200,000 |
| Where taxable income exceeds Rs. 3,200,000 but does not exceed Rs. 4,100,000 | Rs. 430,000 + 30% of the amount exceeding Rs. 3,200,000 |
| Where taxable income exceeds Rs. 4,100,000 | Rs. 700,000 + 35% of the amount exceeding Rs. 4,100,000 |
The following is a comparison highlighting the impact of taxes on salaries under the previous tax slab for the fiscal year 2023-2024:
| Taxable Income | Rate of Tax |
| Where taxable income does not exceed Rs. 600,000 | 0% |
| Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000 | 2.5% of the amount exceeding Rs. 600,000 |
| Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000 | Rs. 15,000 + 12.5% of the amount exceeding Rs. 1,200,000 |
| Where taxable income exceeds Rs. 2,200,000 but does not exceed Rs. 3,600,000 | Rs. 165,000 + 22.5% of the amount exceeding Rs. 2,400,000 |
| Where taxable income exceeds Rs. 3,200,000 but does not exceed Rs. 6,000,000 | Rs. 435,000 + 27.5% of the amount exceeding Rs. 3,600,000 |
| Where taxable income exceeds Rs. 6,000,000 | Rs. 1,095,000 + 35% of the amount exceeding Rs. 6,000,000 |
- The tax slabs outlined in the Finance Bill 2024 indicate that individuals earning at least Rs. 6 million annually (equivalent to Rs. 500,000 per month) will bear the most significant tax burden, with their tax obligation increasing by Rs. 22,500.
- Interestingly, salaried individuals earning up to Rs. 12 million annually (around Rs. 1 million per month) will also face a tax increase of Rs. 22,000.
- While the income tax exemption threshold of Rs. 50,000 remains unchanged, the tax obligations for other salary brackets have been revised. For example, individuals earning Rs. 100,000 per month will now pay Rs. 2,500 in taxes, compared to Rs. 1,250 previously.
- Becoming a filer in Pakistan offers numerous benefits! Don’t wait—with Taxocrate’s expert tax lawyers and consultants, you can easily file your tax returns.
Income Tax on Salaries in Pakistan – FAQ 2025
Q: What is the income tax exemption threshold in Pakistan for 2025?
A: The income tax exemption threshold in Pakistan for 2025 remains at Rs. 50,000.
Q: How is income tax calculated on salaries in Pakistan?
A: Income tax on salaries is calculated based on the tax slabs and rates, ranging from 5% to 35%, depending on income levels.
Q: What are the current income tax slabs for salaried individuals in Pakistan?
A: The tax slabs in 2025 range from 5% for incomes between Rs. 600,000 and Rs. 1.2 million, to 35% for incomes above Rs. 30 million.
Q: At what monthly salary do salaried individuals start paying income tax in Pakistan?
A: Salaried individuals start paying income tax when their monthly salary exceeds Rs. 50,000.
Q: What is the tax liability for individuals earning Rs. 500,000 per month in 2025?
A: Individuals earning Rs. 500,000 per month will face an increase in tax liability of Rs. 22,500.
Q: How much income tax will an individual earning Rs. 1 million annually pay in 2025?
A: An individual earning Rs. 1 million annually will pay around Rs. 22,000 in tax.
Q: What is the tax increase for individuals earning between Rs. 6 million and Rs. 12 million annually in Pakistan?
A: Individuals making Rs. 6 million to Rs. 12 million annually will experience a tax increase of Rs. 22,000.
Q: How much additional tax do salaried individuals making Rs. 100,000 per month have to pay in 2025?
A: Salaried individuals making Rs. 100,000 monthly will now pay Rs. 2,500 in tax, compared to Rs. 1,250 previously.
Q: What is the impact of becoming a non-filer on income tax calculation in Pakistan?
A: Non-filers have a higher tax rate and additional penalties compared to filers.
Q: How can salaried individuals in Pakistan benefit from becoming a filer?
A: By becoming a filer, salaried individuals can access benefits such as lower tax rates and smoother tax filing processes.
Q: Is the income tax exemption threshold the same for all taxpayers in Pakistan?
A: No, the exemption threshold remains at Rs. 50,000, but individuals earning below this threshold do not pay taxes.
Q: What happens to income tax if an individual’s salary exceeds the exemption threshold?
A: Individuals earning above Rs. 50,000 monthly must pay income tax based on the applicable tax slabs.
Q: How does the income tax exemption threshold affect low-income salaried individuals in Pakistan?
A: Low-income salaried individuals earning up to Rs. 50,000 per month are exempt from income tax.
Q: What happens to salaried individuals whose salaries are below the exemption threshold in Pakistan?
A: Salaried individuals earning below Rs. 50,000 monthly do not pay any income tax.
Q: How much income tax is applicable for salaried individuals earning Rs. 75,000 monthly in 2025?
A: Individuals earning Rs. 75,000 monthly will pay Rs. 2,500 in tax.
Q: Can salaried individuals reduce their tax liability by utilizing exemptions or deductions?
A: Yes, salaried individuals can reduce their tax liability through available deductions and exemptions.
Q: What portion of salary is exempt from income tax for salaried individuals in Pakistan?
A: Salaried individuals earning up to Rs. 50,000 monthly are exempt from income tax.
Q: How does the income tax exemption threshold impact salaried individuals earning less than Rs. 50,000 per month?
A: Individuals earning less than Rs. 50,000 per month do not pay any income tax.
Q: What happens to salaried individuals earning between Rs. 50,000 and Rs. 60,000 monthly?
A: Individuals making Rs. 60,000 monthly still fall below the exemption threshold and are not required to pay taxes.
Q: How much tax will a salaried individual earning Rs. 800,000 annually pay in 2025?
A: A salaried individual earning Rs. 800,000 annually will pay Rs. 12,500 in tax.
Q: What is the income tax liability for salaried individuals earning Rs. 3 million per year?
A: Salaried individuals earning Rs. 3 million annually will pay around Rs. 152,000 in tax.
Q: How much tax will be applicable for salaried individuals making Rs. 1.5 million annually?
A: Individuals making Rs. 1.5 million annually will pay Rs. 60,000 in tax.
Q: What is the tax responsibility for individuals earning Rs. 10 million annually?
A: Individuals earning Rs. 10 million annually will face a tax liability of Rs. 3,600,000.
Q: How is income tax calculated for salaried individuals earning between Rs. 2 million and Rs. 4 million per year?
A: Salaried individuals earning between Rs. 2 million and Rs. 4 million annually pay 15% tax.
Q: What is the tax impact on salaried individuals earning Rs. 900,000 annually?
A: Individuals earning Rs. 900,000 annually will pay Rs. 27,000 in tax.
Q: How much additional tax do salaried individuals making Rs. 2.5 million annually have to pay?
A: Salaried individuals making Rs. 2.5 million annually will pay Rs. 215,000 in tax.
Q: What is the tax liability for individuals earning Rs. 7 million per annum in 2025?
A: Individuals earning Rs. 7 million annually will pay Rs. 1,485,000 in tax.
Q: How much tax will be deducted from salaried individuals making Rs. 5.5 million annually?
A: Salaried individuals making Rs. 5.5 million annually will pay Rs. 1,107,500 in tax.
Q: What happens to salaried individuals earning between Rs. 12 million and Rs. 15 million annually?
A: Individuals earning between Rs. 12 million and Rs. 15 million annually will pay 30% tax.
Q: What is the tax rate for salaried individuals earning between Rs. 600,000 and Rs. 1.2 million?
A: The tax rate for individuals earning between Rs. 600,000 and Rs. 1.2 million is 5%.
Q: How much tax is applicable for salaried individuals making between Rs. 1.2 million and Rs. 2.2 million?
A: Individuals earning between Rs. 1.2 million and Rs. 2.2 million pay 15% tax.
Q: What is the tax calculation for individuals making between Rs. 3.2 million and Rs. 4.1 million annually?
A: Individuals earning between Rs. 3.2 million and Rs. 4.1 million pay 25% tax.
Q: How much tax do salaried individuals earning between Rs. 6 million and Rs. 12 million annually have to pay?
A: Individuals earning between Rs. 6 million and Rs. 12 million pay 30% tax.
Q: What happens to salaried individuals earning between Rs. 12 million and Rs. 30 million?
A: Individuals earning between Rs. 12 million and Rs. 30 million pay 35% tax.
Q: How much tax do salaried individuals earning above Rs. 30 million pay?
A: Individuals earning above Rs. 30 million pay 35% tax.
Q: How much tax do salaried individuals earning between Rs. 500,000 and Rs. 600,000 monthly pay?
A: Salaried individuals earning between Rs. 500,000 and Rs. 600,000 monthly pay 5% tax.
Q: What is the tax responsibility for salaried individuals making between Rs. 1 million and Rs. 2 million annually?
A: Salaried individuals making between Rs. 1 million and Rs. 2 million annually pay 15% tax.
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