Running a business in Pakistan and have salaried employees? Then understanding payroll tax isn’t optional — it’s your legal responsibility. Let’s break it down in simple terms.
What is Payroll Tax?
Payroll tax refers to the income tax deducted by an employer from an employee’s salary and submitted to FBR on their behalf. This includes:
- Withholding Income Tax (under Section 149)
- EOBI & Social Security contributions (if applicable)
- Other statutory deductions based on salary structure
Who Needs to Pay Payroll Tax?
If you’re a registered business, private limited company, or even a sole proprietor with salaried staff, payroll tax applies to you. Employers are responsible for:
- Deducting tax at source
- Depositing it into FBR’s account
- Issuing salary slips and certificates
👉 Need help setting this up? FilerNow’s Business Registration can assist you from day one.
Payroll Tax Rates in Pakistan
The rate depends on the employee’s monthly salary and follows FBR’s salary tax slabs. For FY 2024–2025, tax starts from income above Rs. 600,000/year.
👉 Check current Tax Rates in Pakistan for detailed slabs.
Why Payroll Tax Matters?
- It’s legally required by FBR
- Builds trust with employees through transparent payslips
- Protects your business from FBR notices and audits
- Helps you maintain a clean ATL status
👉 Need to file employee taxes correctly? FilerNow’s Tax Return Filing team ensures timely and compliant submissions.
Payroll Tax Filing Process
- Calculate monthly salaries and applicable deductions
- Generate salary slips
- Deduct withholding tax
- Submit tax via FBR portal
- Maintain employee tax records
👉 Using payroll software or outsourcing to professionals like FilerNow can save time and prevent costly errors.
Common Payroll Tax Questions
Q1: Do freelancers need to pay payroll tax?
No. Freelancers pay income tax, not payroll tax, unless they hire salaried staff.
👉 Freelancer Tax Filing
2. What is the employer’s responsibility in payroll tax?
Employers are responsible for calculating tax on employee salaries, deducting it, and depositing it with FBR every month. Missing this can lead to penalties.
👉 Need help with Tax Return Filing?
3. How can I calculate the correct payroll tax on salaries?
You can use FBR’s salary tax slabs or an automated tool like FilerNow’s upcoming Tax Calculator for accurate monthly deductions.
4. Do I need to register my business to pay payroll taxes legally?
Yes, you must be a registered entity (sole proprietor, partnership, or company).
👉 Register your business with FilerNow
5. What happens if payroll tax is not submitted to FBR on time?
Late submissions can result in FBR notices, penalties under Section 182, and audit risks.
👉 FBR Notice Response Help
6. Can FilerNow handle monthly payroll tax filing for my company?
Yes! FilerNow provides full payroll tax support — from calculations to submission and record-keeping.
👉 Contact FilerNow for Payroll Support