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Compliance setup — this guide covers statutory, payroll, tax, and regulatory requirements. Octal HR is configurable for different countries, regions, and organizational policies.

FY 2025-26 income tax slabs for salaried persons

The following slabs apply for salaried individuals as per the Finance Act 2025 (effective 1 July 2025 – 30 June 2026). Octal HR ships with these slabs pre-configured and applies them automatically to every payroll run.

Annual taxable income (PKR)Tax rateFixed amount
Up to 600,0000%Nil
600,001 – 1,200,0005%On amount exceeding 600,000
1,200,001 – 2,200,00015%30,000 + 15% on amount exceeding 1,200,000
2,200,001 – 3,200,00025%180,000 + 25% on amount exceeding 2,200,000
3,200,001 – 4,100,00030%430,000 + 30% on amount exceeding 3,200,000
Above 4,100,00035%700,000 + 35% on amount exceeding 4,100,000
Filer vs non-filer: Octal HR calculates WHT for both filers and non-filers. Non-filer rates are higher as prescribed by FBR. Mark an employee's filer status under Employee → Tax Information → Tax Filer Status.

How Octal HR calculates monthly WHT

Octal HR uses the annualised income method (as required by FBR) to determine the monthly tax deduction:

Step-by-step calculation example

Employee: Gross monthly salary = PKR 150,000

1. Annual gross income: 150,000 × 12 = 1,800,000 2. Less: exempt allowances (medical reimbursement, conveyance up to FBR limits) Annual taxable income = 1,800,000 (assuming no exempt allowances) 3. Applicable slab: 1,200,001 – 2,200,000 → 15% slab Tax = 30,000 + 15% × (1,800,000 − 1,200,000) = 30,000 + 15% × 600,000 = 30,000 + 90,000 = 120,000 annual tax 4. Monthly WHT: 120,000 ÷ 12 = PKR 10,000 / month
Marginal month adjustment: If an employee receives a mid-year increment, Octal HR automatically recalculates the remaining months' WHT based on the updated projected annual income — you do not need to do anything manually.

Configuring employee tax details

Go to Employee → [Name] → Tax Information and fill in:

  • NTN — National Tax Number (mandatory for filers)
  • Tax Filer Status — Active Filer / Non-Filer
  • Exempt Allowances — any allowances that are tax-exempt under FBR rules (medical, conveyance, meal, uniform)
  • Additional WHT — if an employee requests additional tax to be deducted (e.g. to cover other income)

Viewing the tax deduction report

After each payroll run, download the WHT summary from Payroll → Reports → Tax Deduction Summary. The report shows each employee's annual projected income, slab applied, and month-wise deduction — in the format required for FBR e-filing via IRIS.

Annual tax certificate (Form 16 / IT-2)

At fiscal year end (June 30), generate the annual income tax certificates from Payroll → Year-End → Tax Certificates. Octal HR populates the certificate template per FBR Form 16 requirements. See the dedicated article: Generating annual income tax certificates.

Disclaimer: This article reflects FBR tax slabs as of 1 July 2025. Always verify against the latest Finance Act notification and consult your tax advisor for specific situations. Octal HR updates slab tables whenever the Finance Bill is enacted — you will receive an in-app notification.

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