Every month your employer deducts income tax from your salary and deposits it with the Federal Board of Revenue (FBR). Many employees never check the number. Understanding how salary tax is calculated in Pakistan helps you spot errors, plan raises and file your return with confidence. This guide walks through the method step by step, with our free FBR Salary Tax Calculator 2026-27 doing the maths.
Step 1: Work out annual taxable salary
Add up your yearly salary income: basic, allowances, bonuses and other taxable benefits. The tax year runs from 1 July to 30 June. Monthly salary × 12 is a starting point, plus any bonuses expected in the year.
Step 2: Find your slab
The federal budget sets salary slabs each year. Each slab has:
- A fixed amount of tax for income up to the slab’s starting point
- A rate applied to income above that point
Income up to the exempt threshold is not taxed. Slabs change in budgets, so the calculator uses the slabs for the selected tax year.
Step 3: Calculate annual tax
Annual tax = fixed amount of your slab + rate × (income − slab start)
Step 4: Monthly withholding
Monthly tax ≈ annual tax ÷ 12
Employers adjust deductions if your income changes during the year, for example after a raise or bonus.
Step 5: Take-home pay
Monthly take-home = monthly gross − monthly tax − other deductions (EOBI, provident fund, loans)
Read gross vs net salary for other deductions.
An illustration of the method
Imagine a simplified slab table where income from Rs 1.2 million to Rs 2.2 million is taxed at a fixed Rs 6,000 plus 15% above Rs 1.2 million. For an annual salary of Rs 1.8 million:
- Above slab start: 1,800,000 − 1,200,000 = 600,000
- Tax: 6,000 + 15% × 600,000 = Rs 96,000 a year, Rs 8,000 a month
The numbers here are only to show the method; actual FBR slabs for the current year are built into the calculator.
Why filing a return still matters
Even if tax is deducted at source, filing an annual return keeps you on the Active Taxpayers List. Filers usually pay lower withholding tax on banking, property and vehicle transactions. Read filing a tax return as a salaried person.
Check your payslip
Compare the tax line on your payslip with the calculator. For converting pay periods, use the Salary Calculator.
Frequently asked questions
How is salary tax calculated in Pakistan?
Annual taxable salary is placed in an FBR slab; tax is the slab’s fixed amount plus a rate on income above the slab start.
When does the tax year start?
On 1 July and ends on 30 June.
Does a raise reduce my take-home pay?
No. Only income in a higher slab is taxed at the higher rate.