Pakistan (PK)

Pakistan is South Asia's second-largest country and a land of extraordinary contrasts — from the towering Karakoram peaks in the north to the bustling port city of Karachi on the Arabian Sea.

Capital: Islamabad

Region: Asia

Language: Urdu

Currency: PKR (₨)

Cost of living: Very affordable (index 20)

Emergency: 15

Tax & Payslip Guide

Understanding your taxes in Pakistan — tax year July 1 to June 30.

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Tax Year

July 1 to June 30

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Filing Deadline

Individual income tax returns are generally due by 30 September after the tax year unless FBR extends the deadline. FBR has historically granted extensions — verify the current deadline at fbr.gov.pk.

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VAT (Standard)

18% federal sales tax on many goods

📊 Income Tax Brackets

Income from	Income to	Rate	Notes
0	600,000	0%	Salaried individuals: annual taxable salary up to PKR 600,000 (FY 2025-26, July 2025 – June 2026).
600,001	1,200,000	1%	PKR 600,001–1,200,000: 1% on amount above PKR 600,000.
1,200,001	2,200,000	11%	PKR 1,200,001–2,200,000: PKR 6,000 fixed plus 11% on excess.
2,200,001	3,200,000	23%	PKR 2,200,001–3,200,000: fixed tax plus 23% on excess.
3,200,001	4,100,000	30%	PKR 3,200,001–4,100,000: fixed tax plus 30% on excess.
4,100,001	∞	35%	Above PKR 4,100,000: fixed tax plus 35% on excess. An additional 9% surcharge applies on income above PKR 10,000,000.

🏛️ Social Contributions

EOBI (Employees Old-Age Benefits Institution)

Employee: Small fixed employee contribution where covered

Employer: Employer contribution based on notified wage base

EOBI coverage is mainly formal-sector and employer-based; foreign staff coverage depends on status and employer practice.

Provincial social security

Employee: Usually not a meaningful expat payroll deduction

Employer: Employer contribution where applicable

Provincial employee social-security institutions cover eligible workers, usually lower-wage formal employees.

Provident Fund / gratuity

Employee: Scheme or contract-specific

Employer: Scheme or contract-specific

Many employers operate recognised provident funds or gratuity plans; expatriates should confirm vesting and departure withdrawal terms.

🛒 VAT Rates

18% federal sales tax on many goods

Standard

Reduced/exempt/zero-rated treatment varies by item, province and sector.

Reduced

0% for exports and selected zero-rated supplies.

Super reduced

Pakistan has federal sales tax on goods plus provincial sales tax on services. Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan and Islamabad service-tax treatment can differ. Verify the applicable rate with a local tax adviser before invoicing.

🧾 Sample Payslip Decoder

Gross Salary PKR 600,000/month (PKR 7,200,000/year)

Gross salary + PKR 600,000

Income tax PAYE (progressive rate on PKR 7,200,000 annual; approx. 23% effective) - -PKR 137,500

EOBI employee contribution (1% of minimum wage PKR 37,000) - -PKR 370

Provident Fund employee contribution (10% of basic, if PF scheme applies) - -PKR 36,000

Net Salary (Take-home) Approx. PKR 426,130/month (without PF: ≈PKR 462,130)

Illustrative for FY 2025–26. Annual gross PKR 7,200,000. FBR tax slabs: 0% on first PKR 600,000; 5% on PKR 600,001–1,200,000 (PKR 30,000); 15% on PKR 1,200,001–2,400,000 (PKR 180,000); 25% on PKR 2,400,001–3,600,000 (PKR 300,000); 30% on PKR 3,600,001–6,000,000 (PKR 720,000); 35% on PKR 6,000,001–7,200,000 (PKR 420,000) = PKR 1,650,000/year = PKR 137,500/month. EOBI contribution based on PKR 37,000 minimum wage × 1% = PKR 370. Provident Fund deduction applies only where employer operates a registered PF trust (10% employee, 10% employer of basic salary). Employer also contributes 5% of minimum wage to EOBI (PKR 1,850/month) on top of gross. No GST/sales tax deducted on employment income.

🌍 Special Expat Tax Rules

Tax residence and Pakistan-source employment income need review before arrival. A salary paid offshore can still be taxable if services are performed in Pakistan. Expat packages should clarify tax equalisation, housing, driver, school fees, home leave, security and offshore salary-split treatment.

📋 Double Tax Treaties

Pakistan has double-tax treaties with many countries including UK, USA, China, UAE, Saudi Arabia, Germany, France and most GCC states. Relief normally requires tax-residence certificates, correct withholding positions and return disclosures; it does not replace local filing where FBR requires it.

Federal Board of Revenue (FBR)

https://fbr.gov.pk

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