Pakistan Payroll — Section 149 Salary Tax, EOBI & Provincial Social Security

Establish the employer's compliance registrations before the first payroll run. Confirm the NTN (National Tax Number) on the FBR IRIS portal, EOBI registration number (mandatory for establishments with 5+ employees), and the correct provincial social security institution based on where the establishment operates — SESSI (Sindh), PESSI (Punjab), KPESSI (KP), or BESSI (Balochistan). Without all three registrations the employer cannot file the Section 165 statement or pay EOBI.

For each employee, collect and validate the full gross emolument package: basic salary, all allowances, and perquisites in cash or kind. Perquisites must be valued under Section 13 of the ITO 2001 (e.g. company vehicle, accommodation, utility allowances) and added to the chargeable salary figure. Identify any Sixth Schedule exemptions that may reduce the taxable base (e.g. certain medical allowances, conveyance allowances within statutory limits). This step produces the monthly taxable salary figure that feeds into the Section 149 withholding computation.

Apply the First Schedule, Part I, Division I salary tax brackets (as updated by the current Finance Act) to each employee's annualised taxable salary to derive the annual tax liability, then divide by the number of remaining months in the tax year to obtain the monthly withholding amount. Mid-year joiners are computed on remaining months. Adjust for any under- or over-withholding from earlier months in the same tax year. Verify each employee's Active Taxpayer List (ATL) status — non-filers attract higher withholding under Section 149 read with the non-filer rate provisions. The IRIS portal is the authoritative source for ATL status.

Compute EOBI contributions for all insured employees using the prevailing federal minimum wage (verify the current FBR/EOBI notification — the base was PKR 37,000/month as of recent notifications but is subject to revision). Employee share is 1% and employer share is 5% of the minimum wage, regardless of the employee's actual salary. In parallel, determine provincial social security (SESSI/PESSI/KPESSI/BESSI) eligibility by checking whether each employee's monthly wage falls at or below the provincial insured-person threshold; employer-only contributions of 6% apply to eligible workers. Submit via the EOBI portal (PR-03 challan + PR-04 schedule) and the relevant provincial ESSI portal by the 15th of the following month.

File the monthly Section 165 statement on the FBR IRIS portal by the 15th of the month following the salary payment. The statement covers all withholding agents' deductions, including Section 149 salary tax. Each employee row must show name, CNIC, NTN (if any), gross salary paid, and tax withheld, cross-referenced to the CPR number proving deposit. Late filing attracts a penalty of PKR 5,000 per day under Section 182 ITO 2001; failure to deduct makes the employer personally liable under Section 161.

At the close of the tax year (30 June), reconcile the total Section 149 tax withheld across all twelve monthly Section 165 statements against the sum of all CPRs deposited. Identify any year-end true-up required (leavers mid-year, bonus payments, perquisite re-valuations). By 31 July, file the annual Section 149/165 reconciliation on IRIS and issue each employee a Certificate of Tax Collected/Deducted in the form prescribed under Rule 42 of the Income Tax Rules 2002, showing gross salary by month, tax deducted by month, and all CPR references. Employees need this certificate to file their own annual income tax return on IRIS by 30 September.