Gross vs Net Salary in Pakistan — What Gets Deducted
Why your offer letter and your bank deposit differ
New employees are often surprised that the figure on their offer letter is larger than what lands in their account. The difference is the gap between gross salary and net salary. Knowing what sits between them helps you read your payslip with confidence in tax year 2026-27.
Gross salary
Gross salary is your total pay before any deductions. It includes your basic salary plus all allowances, such as house rent, conveyance, utilities and medical allowance, plus any bonus or commission for the period.
Net salary
Net salary, often called take-home pay, is what remains after statutory and contractual deductions are subtracted from gross. The common deductions are:
- Income tax (withholding): deducted monthly under the FBR slabs (Income Tax Ordinance 2001).
- Employee EOBI: 1% of the minimum wage under the EOBI Act 1976.
- Provident fund (employee share): the employee's own monthly contribution to the fund.
- Other deductions: loan instalments, advances or union dues, where applicable.
A worked example
| Item | Amount (monthly) |
|---|---|
| Gross salary | Rs 200,000 |
| Less: income tax | Rs 13,000 |
| Less: employee EOBI | Rs 400 |
| Less: provident fund (employee) | Rs 8,000 |
| Net salary | Rs 178,600 |
In this example, gross pay of Rs 200,000 becomes net take-home of Rs 178,600 after deductions. The exact figures depend on your salary structure and slab.
What is NOT deducted from you
Some costs are borne by the employer, not the employee. The employer's 5% EOBI share and the employer's provident fund contribution sit on top of your gross pay as company costs, they do not reduce your net salary. Remember, too, that medical allowance is exempt up to 10% of basic, so it reduces your taxable income even though it is part of gross pay.
Reading your payslip
A clear payslip should list gross pay, each deduction separately, and the final net figure. If the deductions are bundled into one line, it is hard to verify they are correct, which is why itemised payslips matter.
How Zaffre HRM clarifies pay
Zaffre HRM, part of the Zaffre Axon platform, generates itemised payslips that show gross pay, income tax, EOBI, provident fund and any other deductions, ending in a clear net figure. Because tax slabs, EOBI and allowance rules are configured centrally on Zaffreaxon, every deduction is computed correctly and employees can see exactly how gross becomes net.
References: Income Tax Ordinance 2001; EOBI Act 1976; Finance Act 2026 (Federal Budget 2026-27); FBR.
Give employees clear payslips
Book a demo with Zaffre Tech to see how Zaffre HRM turns gross salary into transparent net pay.