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, showing the saving versus an un-structured salary — with the clause that allows it.
Enter your monthly gross. We suggest a salary structure that legally minimises tax, and show the saving versus an un-structured salary — 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 — confirm with your tax advisor.
Tax-efficient payroll, automatically.
Zaffre HRM — the payroll module of Zaffre Axon by Zaffre Tech — applies allowance exemptions and FBR slabs on every payroll run.