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. Once you know what comes off in between, your payslip for tax year 2026-27 is much easier to read.
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 lists gross pay, each deduction on its own line, and the final net figure. If the deductions are lumped into one line, you cannot easily check them, 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. Tax slabs, EOBI and allowance rules are set up in one place on Zaffreaxon, so every deduction is worked out correctly and employees can see 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 shows employees the path from gross salary to net pay.