EOBI and Statutory Contributions in Pakistani Payroll Explained

Income tax is only one part of payroll compliance. Pakistani employers also deal with statutory contributions. The best known is the Employees' Old-Age Benefits Institution (EOBI) scheme, which provides pension and related benefits. These are separate from income tax and have their own rules on who pays and how much.

How EOBI Differs from Income Tax

EOBI involves both an employer share and an employee share calculated on a defined wage basis, and it is paid to the institution rather than to the FBR. Because it is a separate stream, payroll must compute it independently of the income-tax engine while still showing the employee a complete picture of all deductions on a single payslip. If the company runs a recognised provident fund, those contributions are one more stream, with their own tax treatment.

Keeping the Streams Separate

• Compute EOBI employer and employee shares on the correct wage basis
• Keep statutory contributions separate from income tax in the ledger
• Reflect all deductions clearly on a single, transparent payslip
• Handle provident fund contributions and their tax treatment correctly
• Generate the records needed for statutory deposits

Zaffre HRM, part of Zaffre Axon by Zaffre Tech, runs income tax, EOBI and provident fund as separate calculations that feed the same payslip. Each one is worked out on its own basis, which avoids the common mistake of mixing statutory contributions up with tax.

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