Section 149 Withholding Tax on Salaries in Pakistan 2025-26
Last reviewed by Zohaib Nasir, registered tax practitioner
Section 149 of the Income Tax Ordinance 2001 requires employers to deduct tax monthly from employee salaries based on projected annual income. This is your monthly "tax cut" on the payslip.
How Section 149 works
At the start of each tax year, your employer estimates your annual gross salary. They calculate annual tax based on projected income. They divide by 12 (or remaining months) and deduct that amount from each monthly salary. At year-end, they issue Form 24 (Salary Tax Certificate) showing total deduction.
Why your deduction may differ
Mid-year salary changes (promotion, bonus, increment) require employer to recalculate and adjust. If you join mid-year, employer may average tax over remaining months. Variable pay (commissions, project bonuses) creates fluctuation. These all cause monthly variations from a perfectly even 1/12.
End-of-year reconciliation
When you file your annual return on IRIS, the system compares total tax deducted (per Form 24) with actual tax liability. If excess was deducted, you get a refund. If shortfall, you pay the balance by September 30.