Here we discuss everything you need to know about calculating your payroll tax according to the latest Payroll Tax Tables 2022-23 in Pakistan.
In this article, we also provide an income tax table for the year 2022-2023 in Pakistan.
Have a look at them!
Divisions of Salary Income
Income from work is subject to the following subdivisions, including:
- Base Salary
- Home Rental Allowance (HRA)
- Transportation Allowance
- Medical and other allowances.
Basic Salary
It is a fixed amount of money that you can receive with no additional payments or deductions. It does not include any kind of diets, commissions, bonuses, or overtime pay.
Home Rental Allowance
The Home Rental Allowance (HRA) is a percentage of your gross salary. It depends on your net salary. Generally, the subsidy towards rent is about 40 to 50 percent of your basic salary.
Conveyance or Transportation Allowance
About 10 to 15 percent of wages are used for travel allowances. For example, if you earn PKR 60,000 per month, that amount includes a travel allowance of approximately PKR 6,000 to 9,000.
Medical and Other Allowances
Many employers offer a separate sickness allowance. The same applies to other types of allowances, such as entertainment, travel, and fuel.
Sickness Compensation up to 10% of base salary is tax-free and can be deducted from salary income to calculate taxable income.
In accordance with the revised income tax tables for the financial year 2022-23, the income tax rates have been revised and increased compared to the previous financial year, 2022.
Below is a table mentioning the income tax rate on a taxable income. This will help you get the most out of it.
| Taxable Income | Current Income Tax Rate |
| If a taxable income does not exceed to Rs 600,00 | Tax rate is zero (0) |
| If a taxable income exceeds to Rs 600,00 but not more than Rs 1,200,000 | Tax rate is 2.5 per cent of the amount exceeding Rs 600,000 |
| If a taxable income exceeds to Rs 1,200,000 but not more than 2,400,000 | Tax rate is 12.5 per cent of the amount exceeding Rs 1,200,000 + Rs 15000 |
| If a taxable income exceeds to Rs 2,400,000 but not more than 3,600,000 | Tax rate is 20% of the amount exceeding Rs 2,400,000 + Rs 165,000 |
| If a taxable income exceeds to Rs 3,00,000 but not more than 6,000,000 | Tax rate is 25 per cent of the amount exceeding Rs 3,600,000 + Rs 405,000 |
| If a taxable income exceeds to Rs 6,000,000 but not more than 12,000,000 | Tax rate is 32.5 per cent of the amount exceeding Rs 12,000,000 + Rs 2,955,000 |
| If taxable income exceeds 12,000,000 | Tax rate is 35 per cent of the amount exceeding Rs 12,000,000 + Rs 2,955,000 |
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