Salaried vs Non-Salaried Tax Rates in Pakistan (2026-27)
Pakistan taxes individuals on two entirely different rate curves. Which one applies to you turns on a single test, and the difference in tax on the same income can exceed 10% of your total earnings.
Which rates apply to you? The 75% salary test
You are taxed as a salaried individual when salary income is more than 75% of your total taxable income for the year. Below that share, the non-salaried rates apply.
The non-salaried rates therefore cover:
- Business individuals and sole proprietors
- Freelancers and independent consultants
- Professionals in practice, such as doctors and lawyers
- Associations of persons (AOPs) and partnership firms
- Salaried employees whose non-salary income — rent, business profit, consultancy — exceeds a quarter of their total taxable income
The test is applied on the year as a whole, not month by month. An employee who takes on consultancy work part-way through the year can therefore move from one curve to the other by the time the return is filed, which is the most common way people are caught out.
Both slab tables side by side
Salaried individuals — Tax Year 2026-27
| Annual taxable income | Rate | Tax payable |
|---|---|---|
| Up to PKR 600,000 | 0% | Nil |
| PKR 600,000 to PKR 1,200,000 | 1% | 1% of the amount exceeding PKR 600,000 |
| PKR 1,200,000 to PKR 2,200,000 | 11% | PKR 6,000 + 11% of the amount exceeding PKR 1,200,000 |
| PKR 2,200,000 to PKR 3,200,000 | 20% | PKR 116,000 + 20% of the amount exceeding PKR 2,200,000 |
| PKR 3,200,000 to PKR 4,100,000 | 25% | PKR 316,000 + 25% of the amount exceeding PKR 3,200,000 |
| PKR 4,100,000 to PKR 5,600,000 | 29% | PKR 541,000 + 29% of the amount exceeding PKR 4,100,000 |
| PKR 5,600,000 to PKR 7,000,000 | 32% | PKR 976,000 + 32% of the amount exceeding PKR 5,600,000 |
| Above PKR 7,000,000 | 35% | PKR 1,424,000 + 35% of the amount exceeding PKR 7,000,000 |
Non-salaried individuals and AOPs — 2026-27
| Annual taxable income | Rate | Tax payable |
|---|---|---|
| Up to PKR 600,000 | 0% | Nil |
| PKR 600,000 to PKR 1,200,000 | 15% | 15% of the amount exceeding PKR 600,000 |
| PKR 1,200,000 to PKR 1,600,000 | 20% | PKR 90,000 + 20% of the amount exceeding PKR 1,200,000 |
| PKR 1,600,000 to PKR 3,200,000 | 30% | PKR 170,000 + 30% of the amount exceeding PKR 1,600,000 |
| PKR 3,200,000 to PKR 5,600,000 | 40% | PKR 650,000 + 40% of the amount exceeding PKR 3,200,000 |
| Above PKR 5,600,000 | 45% | PKR 1,610,000 + 45% of the amount exceeding PKR 5,600,000 |
Three structural differences stand out. The non-salaried curve opens at 15% where the salaried curve opens at 1%; it reaches its top rate at PKR 5,600,000 against PKR 7,000,000; and that top rate is 45% rather than 35%. Only the PKR 600,000 exempt threshold is shared.
The same income taxed both ways
Tax payable on identical taxable income under each curve, with no exemptions or rebates claimed. Salaried figures include the section 4AB surcharge where it applies.
| Annual taxable income | Salaried | Non-salaried | Extra tax | Effective rates |
|---|---|---|---|---|
| PKR 600,000 | PKR 0 | PKR 0 | — | 0.0% vs 0.0% |
| PKR 1,200,000 | PKR 6,000 | PKR 90,000 | +PKR 84,000 | 0.5% vs 7.5% |
| PKR 1,600,000 | PKR 50,000 | PKR 170,000 | +PKR 120,000 | 3.1% vs 10.6% |
| PKR 2,400,000 | PKR 156,000 | PKR 410,000 | +PKR 254,000 | 6.5% vs 17.1% |
| PKR 3,000,000 | PKR 276,000 | PKR 590,000 | +PKR 314,000 | 9.2% vs 19.7% |
| PKR 3,200,000 | PKR 316,000 | PKR 650,000 | +PKR 334,000 | 9.9% vs 20.3% |
| PKR 4,800,000 | PKR 744,000 | PKR 1,290,000 | +PKR 546,000 | 15.5% vs 26.9% |
| PKR 6,000,000 | PKR 1,104,000 | PKR 1,790,000 | +PKR 686,000 | 18.4% vs 29.8% |
| PKR 10,000,000 | PKR 2,474,000 | PKR 3,590,000 | +PKR 1,116,000 | 24.7% vs 35.9% |
The gap widens steeply through the middle of the range. At PKR 2,400,000 of taxable income the non-salaried taxpayer pays PKR 254,000 more; at PKR 4,800,000 the difference is PKR 546,000.
Other differences that matter in practice
How the tax is collected
A salaried employee has tax withheld monthly by their employer under section 149, so the liability is settled as it accrues. A non-salaried taxpayer is responsible for their own advance tax under section 147, paid quarterly, and faces default surcharge on any shortfall — a cash-flow burden the salaried curve does not carry.
What can be deducted
This runs the other way. A non-salaried taxpayer deducts the expenses incurred in earning the income — rent, salaries paid, utilities, depreciation — before reaching taxable income. A salaried employee has almost no equivalent: the medical allowance exemption and a small set of credits are the extent of it. The headline rates are therefore not directly comparable to gross receipts, only to taxable income after allowable expenses.
The surcharge — now a non-salaried-only charge
This one has reversed. The section 4AB surcharge used to fall on salaried individuals at 9% above PKR 10,000,000 of taxable income, but the Finance Act 2026 abolished it for income under the head “salary” from TY 2026-27.
It was left untouched for non-salaried income, where it remains 10% of the tax. So above Rs 10 million the gap between the two schedules is now wider than the slab rates alone suggest: the salaried taxpayer’s top marginal impact is a flat 35%, while a business taxpayer faces 45% plus a further 10% of that tax.
Salaried vs non-salaried FAQs
Work out your own position
The calculator on the home page covers salaried income under section 149 for all five recent tax years, with the exemptions and rebates available to the salaried class.