Cost of an employee in Pakistan (2026)
What an employee really costs an employer in Pakistan: gross salary plus mandatory employer social contributions.
On a gross salary of PKR 300,000 per month in Pakistan, an employer pays about PKR 315,000 in total once mandatory employer social contributions of 5% on top of the gross are included.
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How salary is taxed in Pakistan
Income tax in Pakistan is progressive: marginal rates rise from 1% to 35% as income grows.
A tax-free allowance of about PKR 600,000 per year is deducted before income tax.
The standard VAT rate is 18%.
| Annual taxable income | Tax rate |
|---|---|
| Up to PKR 600,000 | 0% |
| Up to PKR 1,200,000 | 1% |
| Up to PKR 2,200,000 | 11% |
| Up to PKR 3,200,000 | 23% |
| Up to PKR 4,100,000 | 30% |
| PKR 4,100,000 and above | 35% |
Frequently asked questions
What does it cost to employ someone in Pakistan?
On top of the gross salary, an employer in Pakistan pays mandatory social contributions. The total cost of employment is the gross salary plus those employer contributions.
Are employer contributions the same as salary deductions?
No. Employer contributions are paid by the company in addition to the gross salary, while employee deductions (income tax and social contributions) are taken out of the gross to leave the net take-home pay.
Employer-contribution rates are approximate and may be capped or vary by region and sector.
Approximate 2026 estimate. Simplified model, verify before relying on it. Not tax advice.
Rates updated June 2026