The Federal Board of Revenue (FBR) has withdrawn the 9% surcharge on salaried individuals with taxable income exceeding Rs. 10 million, providing significant tax relief to high-income employees in Pakistan.
The change took effect from July 1, 2026, under amendments introduced through the Finance Act, 2026, and applies from Tax Year 2027.
What Was the Previous Surcharge?
Under Section 4AB of the Income Tax Ordinance, 2001, a surcharge applied to individuals and associations of persons with taxable income above Rs. 10 million.
Previously, salaried individuals crossing this threshold were subject to a separate 9% surcharge on their income tax liability.
9% Surcharge Removed for Salaried Individuals
Through the Finance Act, 2026, the FBR has specifically withdrawn the 9% surcharge applicable to income chargeable under the head of Salary.
As a result, qualifying salaried individuals with taxable income exceeding Rs. 10 million will no longer be required to pay this additional surcharge from July 1, 2026.
10% Surcharge Continues for Other Taxpayers
The tax relief is specifically applicable to salaried persons. The 10% surcharge for other individuals and associations of persons with taxable income exceeding Rs. 10 million will continue to apply under the relevant provisions of the Income Tax Ordinance.
This amendment creates a clear distinction between salaried taxpayers and other high-income taxpayers in Pakistan.
Key Takeaway
The withdrawal of the 9% surcharge is an important tax development for high-income salaried individuals in Pakistan. Employees falling within this income bracket should review their tax calculations and obligations for Tax Year 2027 in light of the changes introduced through the Finance Act, 2026.
Need Professional Tax Advice?
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