All You Need to Know About Using Salary Tax Calculator and Income Tax Slabs

 In This Post

Division of Gross Salary Income
Latest Income Tax Slab 2022-23 Pakistan
Salary Tax Calculator 2022-23 Pakistan

Are you a salaried individual who wants to learn how to calculate the income tax payable on your salary using an online salary tax calculator? If yes, then you have landed on the right post. Here we are going to discuss everything you should know about the division of your gross salary income and the taxes levied on it according to the latest tax slab rates in Pakistan. We’ll also tell you how to search and use an online salary tax calculator.

So, without further ado, let’s get started!

DIVISION OF YOUR GROSS SALARY INCOME IN PAKISTAN

The salary you take home each year is subjected to the following divisions as per the general practices and according to the Income Tax Ordinance, 2001. Have a look:

• Basic Salary
• House Rent Allowance (HRA)
• Conveyance Allowance
• Medical and Other Allowances

BASIC SALARY

A large percentage of your take-home salary is your basic salary. It’s a fixed amount of money that you may receive without any extra payments or deductions. It doesn’t include any type of allowances, commissions, bonuses, or overtime pay.

HOUSE RENT ALLOWANCE (HRA)

The House Rent Allowance (HRA) makes a certain percentage of your gross salary. It is set according to the amount of your take-home salary. Usually, a house rent allowance is around 40 to 50% of your basic salary. On a basic salary of PKR 30,000, you may get a house rent allowance between the range of PKR 12,000 and PKR 15,000. The HRA percentage may also vary from organisation to organisation. 

CONVEYANCE ALLOWANCE

Even in today’s world, when a large part of the working class is using online platforms, people are required to go to work on a regular basis. To compensate for their commuting expenses, around 10-15% of the take home salaries are allocated for conveyance allowances. For example, if you’re earning PKR 50,000 monthly, a conveyance allowance of around PKR 5,000 to 7,000 will be included in this amount.

MEDICAL AND OTHER ALLOWANCES

Depending on the nature of your job, a medical allowance may or may not be a part of your take-home salary. In many companies, medical allowances are offered separately. The same is the case with other types of allowances such as entertainment allowances, travel allowances and fuel allowances. Like in other countries, the division of your gross salary income in Pakistan greatly depends on your role and designation in a particular organisation.

Quick Fact: As per the Income Tax Ordinance, 2001, the income tax is levied on your total amount of gross salary. It is usually not applied to any other additional bonuses or compensations you may receive as a reward upon your outstanding performance by your employer.

LATEST INCOME TAX SLAB RATES IN PAKISTAN FOR FISCAL YEAR 2022-23

In the federal budget for FY 2022-23, initially, the government proposed exempting salaried class earning up to PKR 100,000 per month from income tax — increasing the threshold from PKR 50,000 per month, which was set in the previous budget.

However, after the International Monetary Fund (IMF) disapproved of these new tax exemptions for the salaried class, the government had to revise the income tax slabs.

Here’s how much tax will now be deducted from your salary as per the latest reports:

• For someone earning below PKR 50,000 per month (PKR 600,000 per year), there will be no tax.
• People earning between PKR 50,000 and PKR 100,000 (PKR 600,000 and PKR 1.2 million per year) will pay a tax of 2.5% of the amount exceeding the PKR 600,000 yearly tax slab.
• Those earning PKR 100,000 to PKR 200,000 per month (PKR 1.2 million to PKR 2.4 million per year) will pay PKR 15,000 plus 12.5% of the amount exceeding the PKR 1.2 million yearly tax slab.
• People with a monthly income between PKR 200,000 to PKR 300,000 (PKR 2.4 million to PKR 3.6 million a year) will be paying PKR 165,000 plus 20% of the amount exceeding the PKR 2.4 million yearly tax slab.
• Those earning PKR 300,000 to PKR 500,000 a month (PKR 3.6 million to PKR 6 million per year) will have to pay PKR 405,000 plus 25% of the amount exceeding the PKR 3.6 million yearly tax slab.
• People earning between PKR 500,000 and 1,000,000 per month (PKR 6 million to PKR 12 million per year) will be paying PKR 1.005 million plus 32.5% of the amount exceeding the PKR 6 million yearly tax slab.
• According to the highest income tax slab, those earning over PKR 1,000,000 a month (more than PKR 12 million per year) will be paying PKR 2.955 million plus 35% of the amount exceeding PKR the 12 million yearly tax slab.

Note: The aforementioned data will help you to calculate the rate of tax on salary in Pakistan.

HOW TO USE SALARY TAX CALCULATOR 2022-23 ONLINE

Want to compute your taxable income as a salaried individual in Pakistan? Take a look at the below mentioned step-by-step process on how to use a salary tax calculator available on multiple online platforms these days:

• Start by Googling the term “Salary Tax Calculator Pakistan”, “Pakistan Tax Calculator for Salary”, Income tax calculator 2022-23 Pakistan” or “Salary Tax Calculator 2022” and you’ll come across many search-relevant results.
• Click any one of the displayed options of results. You’ll land on a page with an online salary tax calculator.
• Simply type in your salary in the given field on the online income tax calculator. 
• Once you hit the enter button, you’ll get the calculated amount of income tax payable on your salary in Pakistan.
• Yes, it is this easy to calculate the amount of income tax payable on your salary in Pakistan.