How to Reduce Tax on Salary in Pakistan
Enter your monthly gross and we suggest a salary structure that legally minimises tax for 2026-27, and show how much you save compared with an unstructured salary, along with the clause that allows it.
Enter your monthly gross. We suggest a salary structure that legally keeps your tax as low as it can go, and show the saving against an unstructured salary along with the clause that allows it.
Suggested tax-efficient structure
| Basic salary (≈90.9%) | Rs 227,273 | Taxable |
| Medical allowance (10% of basic) | Rs 22,727 | Exempt, Clause (139) |
The saving comes only from the medical-allowance exemption (up to 10% of basic salary) under Clause (139), Part I of the Second Schedule to the Income Tax Ordinance 2001, valid where free medical treatment / reimbursement is not separately provided.
Pakistan currently gives salaried individuals limited structuring relief: house rent, conveyance and utilities allowances are fully taxable (unlike some other countries). Recognised provident-fund employer contributions are also exempt up to the lower of 10% of basic or Rs 12,500/month (Sixth Schedule), which can add further relief. The base tax follows the First Schedule, Part I, Division I slabs. Issuing department: Federal Board of Revenue (FBR), Finance Act 2026, effective 1 July 2026. This is guidance, not tax advice, so confirm with your tax advisor.
Payroll that applies the exemptions for you.
Zaffre HRM, the payroll module of Zaffre Axon by Zaffre Tech, applies allowance exemptions and FBR slabs on every payroll run.