EOBI and Statutory Contributions in Pakistani Payroll Explained
Income tax is only one part of payroll compliance. Pakistani employers also handle statutory contributions, the most widely known being the Employees' Old-Age Benefits Institution (EOBI) scheme, which provides pension and related benefits. These contributions are distinct from income tax and follow their own rules on who contributes 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. Provident fund contributions, where a company operates a recognised fund, add another layer with their own tax treatment.
Managing Multiple Streams Cleanly
- 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 logic as distinct but coordinated calculations, so each contribution is correct and every payslip is complete. This prevents the common mistake of conflating statutory contributions with tax.
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