Section 149 - Salary Withholding Tax in Pakistan
Section 149 salary withholding tax Pakistan TY 2026-27 - slab-based employer deduction, monthly projection, Form 16-style certificate, IRIS credit claim.
Section 149 of the Income Tax Ordinance 2001 obliges every employer to deduct income tax on salary payments to employees, applying the First Schedule slab rates to the projected annual taxable income. The employer recomputes the projection whenever salary, bonus, allowances, or benefits change, and adjusts the next month's deduction so total WHT through the year tracks the actual annual liability.
Salaried employees in Pakistan see Section 149 WHT on every payslip from the second slab onwards (above PKR 600,000 annual). For TY 2026-27 (Budget 2026 8-band structure) the rates are: 1% on income between PKR 600,001 and 1,200,000; 11% to 2.2M; 20% to 3.2M; 25% to 4.1M; 29% to 5.6M; 32% to 7M; and 35% above PKR 7,000,000. The 9% / 10% surcharge that Finance Act 2025 levied on individuals above PKR 10M has been SCRAPPED in Budget 2026 - high earners no longer pay it.
Employees claim the Section 149 deduction back in their annual IRIS return under tax-deducted-at-source. The employer issues an annual salary certificate (Form 16-style summary) at year-end showing gross salary, exempt allowances, taxable salary, and total WHT deducted by month. Reconcile this against your monthly payslips before filing - under-deductions create a year-end balance due; over-deductions trigger a refund.
Frequently asked questions
What is Section 149 of the Income Tax Ordinance?
Section 149 requires every employer to deduct income tax on salary payments using the First Schedule slab rates, projected over the annual salary. It is the largest single WHT head in Pakistan.
How much tax does my employer deduct from my salary?
Under Budget 2026-27 (TY 2026-27) the salaried slabs are: 0% up to PKR 600k, 1% to 1.2M, 11% to 2.2M, 20% to 3.2M, 25% to 4.1M, 29% to 5.6M, 32% to 7M, then 35% above PKR 7M. The employer projects your annual salary and spreads the tax across 12 months.
Can I claim Section 149 WHT back?
Yes. Section 149 is adjustable tax - declare your full annual salary in your IRIS return, claim the WHT as tax-deducted-at-source, and either pay the balance or claim a refund.
Does Section 149 apply to bonuses and overtime?
Yes. Bonuses, overtime, and taxable allowances are added to projected salary and increase the employer's monthly Section 149 deduction proportionally.