1. What is Monthly Withholding Tax?

Monthly withholding tax in Pakistan is an advance income tax deducted at source from salaries and other payments. The monthly tax is calculated as 1/12th of the annual tax liability based on progressive tax slabs.

2. How Tax Calculation Works

The calculator uses the following formula:

Where Annual Tax is calculated based on progressive tax slabs:

• For Individuals: 0% up to PKR 600,000, 2.5% to 25% on higher slabs
• For AOPs: 0% up to PKR 400,000, 5% to 30% on higher slabs

3. Importance of Tax Calculation

Details: Accurate tax calculation helps in financial planning, ensures compliance with FBR regulations, and avoids penalties for underpayment.

4. Using the Calculator

Tips: Enter your gross monthly income in PKR and select your filing status (Individual or AOP). The calculator will show your estimated monthly and annual tax liability.

5. Frequently Asked Questions (FAQ)

Q1: What is the tax-free threshold in Pakistan?
A: For individuals, the first PKR 600,000 annually is tax-free. For AOPs, it's PKR 400,000.

Q2: Are there any tax credits available?
A: Yes, various tax credits are available for specific expenses like education, health insurance, and charitable donations.

Q3: When are tax returns due in Pakistan?
A: For individuals, the deadline is typically September 30 following the tax year (July-June).

Q4: What happens if I don't pay monthly taxes?
A: Late payment results in penalties and additional charges. Employers must deduct taxes monthly from salaries.

Q5: Are the tax rates the same for all provinces?
A: Federal tax rates apply nationwide, but provincial taxes may vary slightly.