Example Data Table
This table uses illustrative rates to demonstrate inputs and outputs.
| Scenario | Gross Payment | Income Type | Residency | Rate | Estimated Withheld | Estimated Net |
|---|---|---|---|---|---|---|
| Freelance invoice | PKR 100,000 | Contractor / Services | Resident | 7.50% | PKR 7,500 | PKR 92,500 |
| Dividend payout | PKR 50,000 | Dividend | Resident | 15.00% | PKR 7,500 | PKR 42,500 |
| Royalty to non-resident | PKR 200,000 | Royalties / License | Non-resident | 20.00% | PKR 40,000 | PKR 160,000 |
Formula Used
- Taxable Base (per payment): max(0, Gross − Threshold − Exemption)
- Withholding Tax: Taxable Base × Withholding Rate
- Additional Levy: Taxable Base × Levy Rate
- Contributions: Taxable Base × Contribution Rate
- Total Withheld: WHT + Levy + Contributions + Fixed Withholding
- Net Payment (gross mode): max(0, Gross − Total Withheld)
- Gross-up (net-of-tax mode): Gross = Net ÷ (1 − Total Rate)
- Annualized mode: estimate annual liability, subtract YTD withheld, then spread the remainder across remaining periods.
Rates and rules vary by jurisdiction. Always confirm official thresholds, exemptions, and treaty terms for your situation.
How to Use This Calculator
- Enter the payment amount and choose whether it is gross or net-of-tax.
- Select income type, residency, and frequency to estimate annual effects.
- Use preset rates for a quick estimate, or switch to a custom rate.
- Add thresholds, exemptions, levies, or fixed withholding if applicable.
- If you use annualized mode, include year-to-date withheld and periods completed.
- Press Submit to view results above the form, then download CSV or PDF.
What Withholding Tax Represents
Withholding tax is a payer-collected advance payment toward the recipient’s final tax position. It is usually computed as a percentage of a defined taxable base, then remitted to the tax authority on the recipient’s behalf. For example, a 10% rate on a taxable base of 100,000 yields 10,000 withheld. The calculator separates gross pay, taxable base, and withheld components to clarify cash movement. Tracking the effective rate helps compare scenarios and anticipate cashflow impacts across different payees and contracts over time.
Gross Versus Net-of-Tax Payments
If an amount is entered as gross, withholding is deducted and the remainder becomes the net payment. If an amount is promised net-of-tax, the payment must be “grossed up” so that net remains after deductions. The calculator uses Gross = Net ÷ (1 − total rate). With a 5% withholding and 2% levy, a net of 93,000 implies gross of 93,000 ÷ 0.93 = 100,000.
Thresholds and Exemptions Shape the Taxable Base
Many systems exclude an initial threshold or allow deductions that reduce the taxable base. The calculator models both per-payment and annual bases, converting annual values into per-period equivalents. Taxable Base = max(0, Gross − Threshold − Exemption). This is helpful when small payments fall below a minimum, producing zero withholding, while larger payments trigger withholding only on the amount above the allowed reduction.
Annualized Estimates and Year-to-Date Adjustments
Periodic withholding can be computed per payment, or annualized to smooth liability across the year. Annualized mode estimates annual gross using periods per year (monthly = 12, weekly = 52), applies annual thresholds/exemptions, then allocates remaining liability across the remaining periods after subtracting year‑to‑date withheld. This approach supports midyear rate changes, bonuses, or changing income frequency without overstating one single pay run.
Rounding, Caps, and Export-Ready Records
Real payroll and vendor systems often apply rounding rules and caps. The calculator lets you round to the nearest unit, round up, round down, or avoid rounding until reporting, with up to four decimals. A withholding cap can limit the maximum deduction per payment for policy or contractual reasons. CSV and PDF exports capture inputs, outputs, effective rate, and annualized totals for reconciliation and audit trails.
FAQs
1) Is this calculator official tax advice?
No. It provides an estimate based on the rates and rules you enter. Always validate rates, thresholds, and treaty eligibility using official guidance or a qualified tax professional.
2) When should I use net-of-tax mode?
Use net-of-tax when the contract promises the recipient a fixed take‑home amount. The calculator gross-ups the payment so withholding, levies, and contributions can be deducted while preserving the net.
3) How do thresholds and exemptions differ?
A threshold is an amount excluded before withholding starts. An exemption or deduction reduces the taxable base after the threshold is applied. Both can be set per payment or annual and are prorated by frequency.
4) What does annualized mode do?
Annualized mode estimates total yearly liability from your payment pattern, subtracts year‑to‑date withholding, then spreads the remaining amount across the remaining pay periods. It helps avoid spikes when income varies.
5) How do I reflect amounts already withheld this year?
Enter year‑to‑date withheld and the number of periods already paid. In annualized mode, the calculator reduces remaining liability by that amount and recalculates the per‑period withholding for the rest of the year.
6) Why do CSV and PDF totals sometimes differ by cents?
Differences usually come from rounding settings and when rounding is applied. If you round each component separately, totals may differ slightly from rounding only the final total. Align the rounding rule with your payroll system.