Employer Tax Contributions

Tax Type	Rate	Base
Income Tax Withholding (PAYE)	0% - 35% (Progressive Slabs)	Employee's annual taxable income
Employees' Old-Age Benefits Institution (EOBI)	5%	Minimum wage (PKR 37,000 as of July)
Provincial Social Security (e.g., Sindh)	7%	Employee's wages (up to PKR 25,000 for SESSI in Sindh)
Workers' Welfare Fund (WWF)	2%	Total income if not less than PKR 500,000
Workers' Participation Fund (WPPF)	5%	Company's profit before tax (for industrial undertakings with 50+ workers)

Filing & Compliance

• Monthly/Quarterly: Withholding tax and social security contributions due within 15 days after month-end.
• Annual Income Tax Return (Companies): Due by December 31st for the preceding financial year (July 1st to June 30th).
• Annual Withholding Statements: Employers must submit to the Federal Board of Revenue (FBR) by June 30th annually.

Employee Tax Deductions in Pakistan for 2025

An overview of the tax deductions applicable to salaried employees in Pakistan for the fiscal year 2024-2025.

Tax Slabs and Rates

• Taxable Income: The tax rates are progressive, meaning higher earners fall into higher tax brackets. As of 2025, the following slabs and rates are applicable:

  • PKR 0 to 600,000: Exempt
  • PKR 600,001 to 1,200,000: 5%
  • PKR 1,200,001 to 2,200,000: 15%
  • PKR 2,200,001 to 3,200,000: 25%
  • PKR 3,200,001 to 4,100,000: 30%
  • PKR 4,100,001 to 9,999,999: 35%
  • PKR 10,000,000 and above: 35% plus a 10% surcharge on the tax amount.

Allowances and Exemptions

• Medical Allowance: Reimbursement of actual medical expenses is tax-exempt. If reimbursement isn't provided, a medical allowance up to 10% of the basic salary is exempt.
• Zakat: Zakat payments made under the Zakat and Usher Ordinance are deductible.
• Donations: Donations to approved non-profit organizations are eligible for tax credits. The credit amount is limited to either the donation amount or 30% of taxable income, whichever is lower. Donations made to associates are limited to 15%.

Withholding Tax

• Salary Deduction: Employers are responsible for deducting tax directly from employee salaries according to the applicable tax slabs.
• Other Income: Withholding tax (WHT) rates vary for other income sources like goods, services, or contracts, depending on the individual's filer status (active taxpayer or not).

Tax Year and Residency

• Tax Year: The tax year in Pakistan is from July 1st to June 30th.
• Residency: Pakistan taxes residents on their worldwide income. Non-residents are taxed on Pakistan-sourced income. Residency is determined by spending more than 183 days in Pakistan within a calendar year.

Additional Information

• The provided information pertains to the tax year 2024-2025 and is current as of February 5, 2025. Tax laws and regulations are subject to change. It's essential to stay updated with the latest tax regulations published by the Federal Board of Revenue (FBR). Consulting with a tax advisor can provide personalized guidance.