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9% Surcharge on Salary Above PKR 10 Million (Pakistan 2025-26)

Last reviewed by , registered tax practitioner

The surcharge is a relatively recent addition to Pakistan's tax code, introduced via Finance Act 2024 and modified in Finance Act 2025. It targets high-income individuals.

How the surcharge works

The surcharge is a percentage applied to your calculated income tax (not income), if total taxable income exceeds PKR 10 million in a tax year. For FY 2025-26: salaried pay 9% surcharge, AOP/non-salaried pay 10%. So if your base tax is PKR 1.5M, you pay an extra PKR 135,000 (9%) as surcharge.

Who is affected

Salaried employees earning ~PKR 833,333+/month (PKR 10M annually) and equivalent AOP earners. This typically includes senior executives, high-earning consultants, and successful business owners.

Tax planning options

Legitimate strategies include: maximizing approved pension fund contributions (Section 63 — up to 20% of income), structuring business income through a private limited company (29% corporate tax vs 35-45% individual + surcharge), and timing of bonus payments across tax years.

Frequently asked questions

Does surcharge apply to total income or only the amount above PKR 10M?
Surcharge applies to the entire calculated tax once your total income exceeds PKR 10M. So if you earn PKR 10.1M, the 9% surcharge applies to your full tax bill, not just on the PKR 100k excess. This creates a notable cliff effect at the threshold.