Salary tax certificate in Pakistan: what employers must issue and file

StreamHCM

Written by the StreamHCM team for HR and payroll managers in Pakistan. Updated on 1 November 2026.

Every year around return-filing season, HR gets the same request from staff: "Please send my tax certificate." If payroll has deducted the right tax every month and kept the payment receipts, the certificate takes minutes. If not, it turns into a reconciliation exercise across twelve payslips. This guide explains the legal basis, what the certificate should contain, the filing calendar behind it, and how to keep the numbers consistent.

This guide is general information based on the Income Tax Ordinance, 2001 as published by FBR (amended up to February 2026). It is not tax advice. Check current FBR rules, forms and IRIS requirements, or speak to a tax adviser for a specific case.

Section 149: tax is deducted when salary is paid

Section 149(1) says every person responsible for paying salary must deduct tax "at the time of payment". The deduction uses the employee's average rate of tax, worked out on their estimated salary income for the whole tax year at the rates in the First Schedule (including surcharge under Section 4AB where it applies). The employer adjusts for tax already withheld from the employee during the year, any excess or shortfall from earlier months, and admissible tax credits under Sections 61 and 63 once the employee provides documentary evidence.

In practice this means monthly tax is not a fixed slab lookup on one month's pay. When salary changes mid-year, a bonus is paid or a new joiner brings tax already deducted by a previous employer, the projection and the remaining months' deduction change. Our salary tax calculator and the 2026-27 salary income tax guide show the current slabs.

Section 164: the certificate the employee receives

Section 164(1) requires every person who deducts tax from a payment, including an employer deducting under Section 149, to give the person paid:

• copies of the Computerized Payment Receipt (CPR), or an equivalent document (a SWAPS Payment Receipt where the employer is a notified SWAPS agent), and
• a certificate setting out the amount of tax deducted and other prescribed particulars.

Section 164(2) then requires the employee, when filing their return, to attach copies of the CPRs on which the certificate is based. That is why employees ask for the certificate: it supports the credit for salary tax in their return (Section 168 treats tax deducted as tax paid by the employee).

What to include in a salary tax certificate

A clear certificate normally shows:

1. Employer name, address and NTN.
2. Employee name, CNIC (and NTN if different) and designation.
3. The tax year and the period of employment covered.
4. Gross salary paid, with taxable and exempt amounts.
5. Tax deducted each month and the total for the period.
6. CPR numbers and dates for the deposits.
7. Name, designation and signature of the person responsible for payroll.

Match the figures to the payslips and to what the employer reported in its withholding statements. A certificate that disagrees with the statement filed against the employee's CNIC creates problems for the employee's return.

Quarterly and annual withholding statements (Section 165)

Section 165(1) requires every person deducting tax under Division III of Part V, which includes salary under Section 149, to file a quarterly statement with the Commissioner. It lists each person paid, their CNIC, NTN and address, total payments and tax deducted in the quarter. A statement is required even when no tax was deducted in the period.

Due dates under Section 165(2):

Section 165(6) adds an annual statement from every person deducting tax under Section 149, in the form and manner FBR prescribes. Section 165(4) lets the employer ask the Commissioner in writing for an extension, which is granted only for reasonable cause. FBR notes that not filing withholding statements can lead to penalty proceedings under Section 182.

Deposit first, certify second

The certificate depends on the tax having been deposited. Tax deducted from salary must be paid to the government within the time set by the Income Tax Rules, and the CPR is the proof. Under Sections 161 and 162, a person who fails to deduct tax, or deducts it and does not pay it, can be held personally liable for the amount. So the order in payroll should be: deduct on the payslip, deposit and record the CPR, then report in the quarterly statement and certify to the employee.

Worked example

An employee's monthly salary rises in January. From July to December payroll deducted tax on the old projected annual salary. In January the projection is recalculated on six months paid plus six months at the new salary, the annual tax is recomputed using the current slabs, the tax already deducted is subtracted, and the balance is spread over January to June. The certificate at year end shows the actual month-by-month deductions, which will not all be the same, and they should total the tax on the year's actual taxable salary.

Leavers and new joiners

• Leavers: issue the certificate for the months worked along with the final settlement documents, so the employee can give it to the next employer. See the final settlement guide.
• New joiners: ask for the previous employer's certificate for the same tax year. Section 149 allows the deduction to be adjusted for tax already withheld, so the new employer does not over-deduct.

Common mistakes

• Deducting a flat amount every month and never re-projecting after an increment or bonus.
• Issuing a certificate with totals that do not match the payslips or the quarterly statement.
• Forgetting CPR copies, which the employee must attach to their return.
• Missing a quarterly statement because no tax was deducted that quarter; it is still required.
• Waiting until September to prepare certificates instead of keeping them current each month.

How StreamHCM helps

StreamHCM's payroll applies the current FBR salary tax slabs in every pay run and keeps each employee's monthly tax deduction on the payslip and payroll record, alongside EOBI, provident fund and loans. That gives HR one place to pull month-by-month figures for the certificate and to check them against what was reported. Payroll history is audit-ready and exportable. See payroll software in Pakistan and payroll compliance software.

Questions