Pakistan Tax Calculator 2026-27

Quick answer: Pakistan taxes annual income in progressive slabs — salaried pay 0% up to Rs 600,000, rising to 35% above Rs 7 million (FY2026-27), while businesses and AOPs use a separate scale up to 45%. On spending, GST is 18% on goods, provincial sales tax on services is 15–16%, and restaurants charge as little as 5% when you pay by card. Use the calculator below for the exact figures.

Estimates for guidance only — not tax advice. Salaried slabs reflect Budget 2026-27 (effective 1 July 2026, pending the Finance Act); other rates reflect the current published position. Verify on fbr.gov.pk and your provincial revenue authority.

Tax History: How the Budget Changed Your Bill

The 2026-27 budget cut salaried tax rates on the middle and upper-middle slabs. The chart below compares the total annual income tax a salaried person pays under the old FY2025-26 slabs versus the new FY2026-27 slabs, across a range of incomes — a like-for-like view of the relief, for comparison only.

How Income Tax Works in Pakistan

Pakistan taxes income through a progressive slab system: your income is sliced into bands, and a higher rate applies only to each band, not to your whole income. Every slab has a fixed amount (the tax accumulated from all the slabs below it) plus a marginal rate on the portion of income inside that slab. This is why a small raise that pushes you into a higher slab never reduces your take-home pay — only the rupees above the threshold are taxed at the higher rate.

Who you are matters. Salaried individuals — where salary is more than 75% of taxable income — sit on one scale; non-salaried individuals and Associations of Persons (AOPs), such as sole proprietors, freelancers billing locally, and partnership firms, sit on a separate, steeper scale.

The salaried FY2026-27 rates are proposed — effective 1 July 2026, pending the Finance Act. Marginal rates shown; the calculator applies the exact fixed-amount-plus-marginal-rate arithmetic for each slab. A surcharge of 10% on the tax applies to non-salaried taxpayers and AOPs whose income exceeds Rs 10 million; the equivalent salaried surcharge was abolished for FY2026-27. For the slab-by-slab story of the salaried cuts, see our Budget 2026-27 tax slabs explainer.

GST, Sales Tax on Services, and FED — What's the Difference?

Pakistan has three separate indirect taxes, and which one applies depends on what is being sold and who has jurisdiction. Mixing them up is the most common point of confusion.

So when you buy a physical product, you pay 18% GST to the federal government. When you pay for a service — a salon, a hotel room, a telecom package, a restaurant meal — you pay provincial sales tax on services to the province where it is consumed (16% in Punjab; 15% in Sindh, KP, Balochistan and Islamabad). FED is a narrower excise tax layered on specific items the government wants to discourage or tax heavily, such as cigarettes and sugary drinks, plus a limited set of services in Islamabad.

How Restaurant Tax Works — and Why Card Is Cheaper

A restaurant meal is a service, so it is taxed under provincial sales tax on services, charged on your food bill (not on any service charge or tip the restaurant itself adds). The headline rate is 15–16% — but several provinces deliberately offer a much lower rate for digital payments to pull the cash-heavy sector into the documented economy.

In Punjab and Islamabad, paying by debit or credit card is taxed at roughly 5%, versus about 16% for cash. On a Rs 5,000 food bill that is about Rs 250 in tax by card against roughly Rs 800 in cash — a real, repeatable saving simply for tapping a card. The Restaurant Bill tab above works this out for your bill and province. Rates are set by each provincial authority and are revised from time to time, so treat the figures as current-best and confirm locally.

Business, Remittances and Foreign Income

Business income for a sole proprietor or partnership is taxed on the non-salaried/AOP scale above, after deducting allowable business expenses to arrive at taxable profit. A company (a registered limited entity) is taxed differently again, under the corporate regime rather than these individual slabs.

Foreign remittances sent home through official banking channels are generally not treated as taxable income in Pakistan, with amounts up to around Rs 5 million a year clearly outside the tax net — one reason to always route money through banks and keep the remittance documentation. Separately, advance tax on spending abroad through debit, credit and prepaid cards was reduced to 0.5%, and exporters of IT and IT-enabled services can access a concessional 0.25% rate on their export proceeds. For overseas Pakistanis investing back home, our Roshan Digital Account guide covers the mechanics.

Filer vs Non-Filer: An Easy Way to Lower Withholding

Beyond the slabs, your filer status quietly changes how much tax is withheld from you. A filer appears on the FBR's Active Taxpayer List (ATL) because they have filed their annual return; a non-filer has not, and pays higher withholding tax — often roughly double — on dividends, profit on savings, property and vehicle transactions and more, all deducted at source. Filing a return to get on the ATL is one of the simplest ways to stop overpaying. Our guide on how investments are taxed in Pakistan walks through the filer process and the withholding rates in detail.

Frequently Asked Questions