The Tax Year 2027 slabs
The table below is from the Finance Act 2026 and FBR's Withholding Tax Rate Card for Tax Year 2027 under Section 149. It applies to annual taxable salary income.
- Up to Rs 600,000: 0%.
- Rs 600,001 to Rs 1,200,000: 1% of the amount above Rs 600,000.
- Rs 1,200,001 to Rs 2,200,000: Rs 6,000 plus 11% of the amount above Rs 1,200,000.
- Rs 2,200,001 to Rs 3,200,000: Rs 116,000 plus 20% of the amount above Rs 2,200,000.
- Rs 3,200,001 to Rs 4,100,000: Rs 316,000 plus 25% of the amount above Rs 3,200,000.
- Rs 4,100,001 to Rs 5,600,000: Rs 541,000 plus 29% of the amount above Rs 4,100,000.
- Rs 5,600,001 to Rs 7,000,000: Rs 976,000 plus 32% of the amount above Rs 5,600,000.
- Above Rs 7,000,000: Rs 1,424,000 plus 35% of the amount above Rs 7,000,000.
What changed from last year
Compared with Tax Year 2026, the 1% and 11% bands are unchanged. The fourth band fell from 23% to 20%, and the fifth from 30% to 25%. The single top band of 35% above Rs 4.1 million was split into 29% up to Rs 5.6 million, 32% up to Rs 7 million and 35% only above Rs 7 million. Practitioner summaries of the Act also report that the surcharge previously applied to high-earning salaried individuals was removed for salaried persons. The result is lower tax for most middle and upper-middle salaries.
Worked examples
Monthly salary Rs 100,000, so Rs 1,200,000 a year: tax is 1% of Rs 600,000, which is Rs 6,000 a year or Rs 500 a month.
Monthly salary Rs 250,000, so Rs 3,000,000 a year: tax is Rs 116,000 plus 20% of Rs 800,000, which is Rs 276,000 a year or Rs 23,000 a month.
Monthly salary Rs 500,000, so Rs 6,000,000 a year: tax is Rs 976,000 plus 32% of Rs 400,000, which is Rs 1,104,000 a year or Rs 92,000 a month.
These examples assume the whole salary is taxable and unchanged all year. Exempt allowances, a mid-year raise, bonuses and tax credits all change the answer, which is why the monthly figure should be recalculated rather than fixed in July.
How employers withhold under Section 149
Section 149 of the Income Tax Ordinance 2001 makes the employer a withholding agent for salary. Each month the employer estimates the employee's taxable salary for the year, calculates the annual tax on the slab table, subtracts tax already deducted and spreads the remaining liability across the remaining months. When a raise or bonus arrives, the estimate changes and so does the deduction.
Employers also deposit the tax with FBR and file the related withholding statements, and should give employees a certificate of tax deducted for their return. New joiners should be asked for tax deducted by a previous employer during the same tax year so the annual estimate is correct.
Common payroll errors
- Dividing the annual tax by twelve in July and never revising it.
- Using last year's table for July and August payroll after the Act takes effect.
- Ignoring previous-employer income for mid-year joiners.
- Taxing bonuses at a flat rate instead of through the annual estimate.
- Not reconciling deductions to deposits before year end.
How StreamHCM calculates salary tax
StreamHCM applies current FBR slabs automatically, so Tax Year 2027 rates apply from July 2026 payroll. Each month it re-estimates annual taxable income from earnings so far plus expected earnings, works out the remaining liability and withholds the balance. Our free tax slab calculator uses the same table if you want to check a single salary.
About this guide
This guide is general information, checked against the sources listed below on 24 October 2026. It is not legal or tax advice; confirm current notifications with the relevant authority or your adviser before acting.