Pakistan salary income tax slabs for Tax Year 2027
Pakistan taxes salary progressively. That single design choice causes most of the confusion around slab rates, because the percentage attached to a band is not the percentage anyone actually pays on their income. This guide sets out the eight enacted bands for Tax Year 2027, shows the arithmetic step by step, and gives the effective rate at each income level so a payroll figure can be checked rather than guessed.
The eight Tax Year 2027 salary bands
These bands apply to annual taxable salary for the year running 1 July 2026 to 30 June 2027, as enacted by the Finance Act 2026. The right-hand column shows the total tax at the top of each band, which is a fast way to check that a calculation has not drifted.
| Annual taxable salary | Tax on this band | Total tax at top of band |
|---|---|---|
| Up to Rs 600,000 | Nil | Rs 0 |
| Rs 600,001 – 1,200,000 | 1% of the amount over Rs 600,000 | Rs 6,000 |
| Rs 1,200,001 – 2,200,000 | Rs 6,000 + 11% over Rs 1,200,000 | Rs 116,000 |
| Rs 2,200,001 – 3,200,000 | Rs 116,000 + 20% over Rs 2,200,000 | Rs 316,000 |
| Rs 3,200,001 – 4,100,000 | Rs 316,000 + 25% over Rs 3,200,000 | Rs 541,000 |
| Rs 4,100,001 – 5,600,000 | Rs 541,000 + 29% over Rs 4,100,000 | Rs 976,000 |
| Rs 5,600,001 – 7,000,000 | Rs 976,000 + 32% over Rs 5,600,000 | Rs 1,424,000 |
| Above Rs 7,000,000 | Rs 1,424,000 + 35% over Rs 7,000,000 | No ceiling |
Notice that each band's base amount equals the total tax at the top of the band below it. If a computation produces a figure that breaks that chain, the error is almost always that a marginal rate has been applied to the whole salary instead of to the excess.
The calculation, one step at a time
Take annual taxable salary of Rs 3,600,000 — Rs 300,000 a month. That lands in the fifth band.
- Locate the band. Rs 3,600,000 sits inside Rs 3,200,001 – 4,100,000.
- Take the band's base amount. Rs 316,000. This is the tax already accumulated on the first Rs 3,200,000.
- Find the excess. Rs 3,600,000 − Rs 3,200,000 = Rs 400,000.
- Apply the marginal rate to the excess only. 25% of Rs 400,000 = Rs 100,000.
- Add. Rs 316,000 + Rs 100,000 = Rs 416,000 for the year, or about Rs 34,667 a month.
You draw a salary, tax is deducted at source every month, and you want the return filed properly without spending a weekend inside IRIS.
Effective rate at each income level
The gap between marginal and effective rate is the single most useful thing to understand about the slab table. Below, both are shown together at representative salary levels, all computed from the bands above.
| Annual taxable salary | Annual tax | Marginal rate | Effective rate |
|---|---|---|---|
| Rs 600,000 | Rs 0 | 0% | 0.00% |
| Rs 1,200,000 | Rs 6,000 | 1% | 0.50% |
| Rs 1,800,000 | Rs 72,000 | 11% | 4.00% |
| Rs 2,400,000 | Rs 156,000 | 20% | 6.50% |
| Rs 3,600,000 | Rs 416,000 | 25% | 11.56% |
| Rs 4,800,000 | Rs 744,000 | 29% | 15.50% |
| Rs 6,000,000 | Rs 1,104,000 | 32% | 18.40% |
| Rs 9,000,000 | Rs 2,124,000 | 35% | 23.60% |
Even at Rs 9 million a year — well inside the top band — the effective rate is under 24%. The effective rate approaches 35% only asymptotically, at income levels far above the threshold. For a fuller treatment of why this matters in salary negotiation and appraisal planning, see the guide to marginal versus effective tax rates.
What goes into "taxable salary"
The slab table is only as good as the figure fed into it. Three distinctions cause most disputes:
- Taxable salary is not take-home pay. Take-home is what remains after tax and other payroll deductions. Running take-home through the slabs understates liability every time. If net pay is the only figure available, work backwards before calculating — the gross-to-net walkthrough sets out the sequence.
- Taxable salary is not cost to company. Employer contributions and provisions may sit in cost to company without being taxable salary in the employee's hands, and some benefits are taxable at a prescribed value rather than at cost.
- Benefits and perquisites need valuing before they enter the calculation. Accommodation, a company vehicle, interest-free or concessional loans, utilities and reimbursements each have their own treatment. Add the valued amount to cash pay, then apply the slabs to the total.
Applying the slabs through payroll
Monthly withholding under section 149 is a collection toward the annual slab liability, not a separate monthly tax. The mechanics that trip payroll teams up:
- Annualise first, then divide. Project full-year taxable salary, compute the annual slab tax, subtract tax already deducted year to date, and spread the balance over the remaining months. Never apply the slabs to one month's pay.
- Re-run the projection whenever pay changes. An increment, bonus, arrears payment or benefit change resets the annual figure — and therefore every remaining monthly deduction.
- Mid-year joiners need the prior employer's numbers. A new employer sees only its own payroll. Without the previous salary and deduction certificate, the annual projection is understated and the shortfall lands on the employee at filing. See salary tax with multiple employers.
- Deposit deadline. Tax withheld from salary is deposited to the Federal Board of Revenue on the prescribed date in the month following deduction, with the withholding statement filed on its own cycle. Confirm the current deadline against the FBR withholding pages before setting a payroll calendar.
Where the section 4AB surcharge fits
The Finance Act 2026 framework includes a surcharge under section 4AB equal to 10% of the income tax computed, applying where taxable income exceeds Rs 10 million. Salary income is outside that surcharge for Tax Year 2027; business individuals and associations of persons are not. A taxpayer with both salary and business income should therefore not apply a single blended treatment — the two streams are computed on different schedules, as the business and AOP rate reference sets out.
Five errors that change the answer
- Using the wrong tax year's table. Slab tables are re-enacted annually. A calculation dated after 1 July 2026 that uses Tax Year 2026 bands will be wrong at every income level.
- Applying the marginal rate to total income. The single most common error, and always in the direction of overstating tax.
- Feeding in net pay. Understates the liability; the shortfall appears at filing.
- Taxing a bonus in isolation. Produces a monthly deduction that cannot be reconciled to the annual position.
- Treating a slab estimate as the final return figure. Tax credits, exemptions, other income heads, prior-year adjustments and refunds all sit outside the slab table.
Check your own number
Two practical next steps: run the figure through the salary tax calculator to confirm the arithmetic, then compare the annual result against your year-to-date payroll deductions. If the two differ by more than a rounding amount, the cause is usually an unvalued benefit, an un-annualised bonus, or a mid-year employer change. For a straight table of tax by monthly salary level, use the monthly salary tax reference.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
Questions people also ask
Do the Tax Year 2027 slabs apply to my June 2026 payslip?
No. Tax Year 2027 runs from 1 July 2026 to 30 June 2027. A June 2026 payslip belongs to Tax Year 2026 and is computed on the slabs enacted by the previous Finance Act. Payroll teams therefore run two slab tables across a single calendar year, and a mid-year comparison of net pay will look wrong unless both tables are held side by side.
If I earn Rs 2.5 million, am I taxed 20% on all of it?
No. Rs 2.5 million falls in the Rs 2,200,001–3,200,000 band, so the calculation is Rs 116,000 plus 20% of Rs 300,000 — a total of Rs 176,000. That is an effective rate of about 7.0%, not 20%. The 20% figure is the marginal rate: it only touches the Rs 300,000 sitting above the band floor.
Does the 10% surcharge under section 4AB apply to salary in Tax Year 2027?
Salary income is outside the section 4AB surcharge for Tax Year 2027. The surcharge — 10% of the income tax computed — bites where taxable income of a business individual or an association of persons exceeds Rs 10 million. A salaried taxpayer with other business income should compute the surcharge on the non-salary portion and take advice before applying it.
Is a bonus taxed at a flat rate separate from the slabs?
No. A bonus is added to projected annual taxable salary and the whole figure is re-run through the slabs. Payroll then spreads the remaining liability across the months left in the tax year. Taxing a bonus at a flat guessed percentage is one of the most common payroll errors and usually produces an over- or under-deduction that surfaces at year end.
What counts as taxable salary for slab purposes?
Broadly, cash pay plus the taxable value of benefits and perquisites, before income tax but after any exemption the Ordinance specifically allows. It is not the same as take-home pay and not the same as gross cost to company. If a benefit is being valued for the first time, confirm the valuation rule before it enters the slab computation.
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