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Commentary

2.1.2 Levelling income tax deductions

Pakistan

Procedure for a one-off or annual payment

It is a generally understood practice to deduct the tax in ratio of amount being paid to the total annual amount to be paid. The payment is effectively spread between the pay periods as illustrated below:

Mr X earns PKR 50,000 per month and is entitled to a bonus of PKR 25,000. This makes his total salary income for the year (PKR 50,000 × 12 = PKR 600,000 + PKR 25,000) = PKR 625,000, and breaches

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