How Bonus and Commission Are Taxed on Salary in Pakistan
Bonus and commission are part of salary
For salaried employees in Pakistan, a bonus and a commission paid by your employer are treated as part of your salary income. There is no special lower rate for bonuses. They are added to your taxable salary for the year and taxed at your applicable slab rate under the Income Tax Ordinance 2001. This treatment continues unchanged into tax year 2026-27.
How a bonus can push you up a slab
Because Pakistan's salary tax is progressive, a large bonus can lift part of your income into a higher slab. Remember, though, that the higher rate applies only to the portion that crosses the threshold, not your whole income.
A worked example
Maria's regular taxable salary is Rs 2,100,000, which sits in the 11% band. She receives an annual bonus of Rs 300,000, taking her total to Rs 2,400,000. The first Rs 100,000 of the bonus (up to the Rs 2,200,000 threshold) is taxed at 11%, and the remaining Rs 200,000 falls in the next band and is taxed at 20%. So the bonus is taxed partly at 11% and partly at 20%, not all at one rate.
| Income portion | Slab rate |
|---|---|
| Rs 2,100,001 – 2,200,000 | 11% |
| Rs 2,200,001 – 2,400,000 | 20% |
How withholding handles irregular payments
Employers withhold tax monthly based on a projected annual income. When a one-off bonus is paid, the projection is updated and the additional tax is spread across the remaining months, or deducted in the month of payment, so the correct annual total is collected by June. This is why your take-home pay may dip in a bonus month, the system is catching up on the extra tax due.
Commission for sales staff
Commission earned by an employee from their employer is salary and follows the slab rates above. (Commission paid to an independent agent who is not an employee is different, it can fall under withholding on services. Make sure the relationship is classified correctly.)
Why accurate projection matters
If bonuses are not folded into the annual projection properly, employees can face a nasty year-end adjustment. Smooth, accurate withholding keeps everyone comfortable.
How Zaffre HRM manages bonuses
Zaffre HRM, the payroll module of Zaffre Axon, automatically rolls bonuses and commissions into each employee's annual projection and recalculates withholding so the right marginal tax is applied. Because the FBR slabs are configured centrally on Zaffreaxon, a bonus is taxed precisely across the affected slabs with no manual maths. You can preview the effect with the calculator at https://zaffreaxon.com/salary-tax-calculator.
References: Income Tax Ordinance 2001 (salary and withholding provisions); Finance Act 2026 (Federal Budget 2026-27); FBR.
Handle bonuses with ease
Book a demo with Zaffre Tech to see Zaffre HRM tax bonuses and commissions accurately, month after month.