Often, employers pay the amount of tax chargeable on an employee's salary. This benefit is treated as a taxable benefit and as a result, the amount of tax borne by the employer will be treated as part of the salary and will also be taxed accordingly.
Example
Mr U receives the following from his job with an agreement that his employer shall pay the tax.
| Salary | PKR 900,000 |
| House rent allowance | PKR 300,000 |
| Medical allowance | PKR 150,000 |
Tax liability computation:
| Salary | PKR 900,000 |
| House rent allowance | PKR 300,000 |
| Medical allowance | PKR 150,000 |
| Less: medical allowance (10% of salary) | (PKR 90,000) |
| Taxable income | PKR 1,260,000 |
| Tax liability on PKR 1,200,000 | PKR 15,000 |
| Tax on (1,200,000 – 1,260,000) = 60,000 @ 12.5% | PKR 7,500 |
| PKR 22,500 |
| |
| Grossed |
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Web page updated on 17 Mar 2025 16:27