Pakistan Income Tax Slabs 2026-27 Explained for Salaried Individuals
The Federal Budget 2026-27, enacted through the Finance Act 2026, keeps a progressive structure for salaried individuals effective 1 July 2026. Income tax in Pakistan is federal, so the same slabs apply nationwide regardless of province. Below, Zaffre Tech goes through the slabs in plain English so salaried employees can see how their tax is worked out.
What "taxable salary" means
Tax is charged on your annual taxable salary, not your gross cost-to-company. Most allowances - house rent, conveyance, utilities and mobile - are fully taxable. A few reliefs reduce the base: medical allowance is exempt up to 10% of basic salary (Clause 139, Second Schedule) where free treatment or health insurance is not separately provided, and the employer's provident fund contribution is exempt up to the lower of 10% of basic or Rs 150,000 per year.
The 2026-27 salary tax slabs
The slabs below come from the Income Tax Ordinance 2001, First Schedule, Part I, Division I, as amended by Finance Act 2026.
| Annual taxable income (Rs) | Tax |
|---|---|
| Up to 600,000 | 0% |
| 600,001 - 1,200,000 | 1% of amount over 600,000 |
| 1,200,001 - 2,200,000 | Rs 6,000 + 11% over 1,200,000 |
| 2,200,001 - 3,200,000 | Rs 116,000 + 20% over 2,200,000 |
| 3,200,001 - 4,100,000 | Rs 316,000 + 25% over 3,200,000 |
| 4,100,001 - 5,600,000 | Rs 541,000 + 29% over 4,100,000 |
| 5,600,001 - 7,000,000 | Rs 976,000 + 32% over 5,600,000 |
| Above 7,000,000 | Rs 1,424,000 + 35% over 7,000,000 |
How a slab is read
Each slab only taxes the income that falls inside it. If your annual taxable salary is Rs 1,800,000, you do not pay 11% on the whole amount. You pay Rs 6,000 on the first Rs 1,200,000, then 11% on the Rs 600,000 above it - Rs 66,000 - for a total of Rs 72,000 a year, or Rs 6,000 a month.
A quick worked example
- Annual taxable salary: Rs 2,400,000
- Slab: Rs 116,000 + 20% over Rs 2,200,000
- 20% of Rs 200,000 = Rs 40,000
- Annual tax = Rs 156,000, or Rs 13,000 a month
The Rs 600,000 tax-free floor
Salaried individuals earning up to Rs 600,000 a year (Rs 50,000 a month) pay no income tax. This is where the slabs start, and it keeps lower earners out of the tax net.
Why payroll accuracy matters
Errors usually come from applying the slabs by hand across hundreds of employees, each with a different allowance structure. Zaffre Axon and the Zaffre HRM payroll module apply the FBR slabs, allowance taxability rules, EOBI deductions and provident fund exemptions automatically. The rules are set up in one place, so every payslip follows Finance Act 2026 without anyone recalculating it by hand each month. You can also estimate any figure with the Zaffreaxon salary tax calculator.
References: Finance Act 2026 (Federal Budget 2026-27); Income Tax Ordinance 2001, First Schedule, Part I, Division I; Second Schedule, Clause 139; FBR.
Book a demo
See how Zaffre Axon keeps your payroll aligned to the 2026-27 slabs. Book a demo with Zaffre Tech today.