I work two jobs at the same time; how is tax on both salaries worked out?

Two jobs mean two payslips but one tax bill. The Income Tax Ordinance adds every salary you receive in the tax year together and applies the slab table once. Each employer deducts tax separately under section 149, and because each one usually sees only its own payroll, the combined deduction is often too low. The difference is settled when you file your return.

What does the law say?

One charge on all salary. Section 12(1) makes “any salary received by an employee in a tax year” chargeable in that year under the head Salary. It does not create a separate charge per employer. Salary from both jobs goes into one figure.

One slab table. For an individual whose salary is more than seventy-five per cent of taxable income, tax year 2027 rates are in clause (2) of Division I, Part I, First Schedule:

Taxable income	Tax
Up to Rs. 600,000	0%
Rs. 600,001 to 1,200,000	1% of amount over 600,000
Rs. 1,200,001 to 2,200,000	Rs. 6,000 + 11% of amount over 1,200,000
Rs. 2,200,001 to 3,200,000	Rs. 116,000 + 20% of amount over 2,200,000
Rs. 3,200,001 to 4,100,000	Rs. 316,000 + 25% of amount over 3,200,000
Rs. 4,100,001 to 5,600,000	Rs. 541,000 + 29% of amount over 4,100,000
Rs. 5,600,001 to 7,000,000	Rs. 976,000 + 32% of amount over 5,600,000
Above Rs. 7,000,000	Rs. 1,424,000 + 35% of amount over 7,000,000

Each employer deducts. Section 149(1) requires “every person responsible for paying salary to an employee” to deduct tax at the employee’s average rate, computed on “the estimated income of the employee chargeable under the head Salary for the tax year”. Section 149(2) defines the average rate as the tax on that estimated salary divided by the estimated salary.

Credit, not final tax. Section 168(2) gives you a credit for tax deducted from your pay against the tax due on your taxable income for the year. Section 149 is not among the final taxes listed in section 168(3), so the deductions are adjustable against your total liability. Section 168(5) provides for a refund of credit that cannot be used.

Return. Section 114(1)(ab) requires a return from every individual whose taxable income exceeds the maximum amount not chargeable to tax. The return is where both salaries and both employers’ deductions come together.

How does it work in practice?

Section 149(1) refers to the employee’s estimated salary income for the tax year, not only the salary one employer pays. It also lets an employer adjust for “tax withheld from the employee under this Ordinance during the tax year”, after obtaining documentary evidence. So the law allows an employer to take your other salary and the tax already deducted from it into account. It does not set out a procedure for you to tell each employer about the other job, or oblige an employer to ask. Where neither employer knows about the other, each computes tax as if its salary were your only income, and a shortfall builds up.

Worked example (illustrative figures)

Hina works as an accountant for a textile firm in Lahore, paid Rs. 1,800,000 for tax year 2027, and teaches evening classes at a private college, paid Rs. 1,200,000. The salaries are invented; the rates are the tax year 2027 table above.

What each employer deducts, knowing only its own salary:

1. Textile firm, on Rs. 1,800,000: 6,000 + 11% of 600,000 = 6,000 + 66,000 = 72,000
2. College, on Rs. 1,200,000: 1% of 600,000 = 6,000
3. Total deducted: 72,000 + 6,000 = Rs. 78,000

What the law actually charges on total salary:

1. Total salary: 1,800,000 + 1,200,000 = 3,000,000
2. Band above Rs. 2,200,000 and up to Rs. 3,200,000: 116,000 + 20% of 800,000 = 116,000 + 160,000 = Rs. 276,000

Balance: 276,000 - 78,000 = Rs. 198,000 still payable. Section 168(2) credits the Rs. 78,000 already deducted, and Hina’s return for tax year 2027 would show Rs. 198,000 as tax due.

If the textile firm had documentary evidence of the college salary and its deductions, it could compute her average rate on Rs. 3,000,000 under section 149 and deduct the difference through the year instead.

What if …?

Both employers over-deduct? That is less common but possible, for example if one employer estimates your salary for a full year and you leave early. Section 168(5) provides that unusable credit is refunded.

One of the jobs is really a contract for services? Payments for services as an independent contractor are not salary, and tax on them is deducted under different provisions. Whether a post is employment depends on the facts of the engagement. This page covers only two salaried jobs.

My second income is small? The slab table still applies to the total. A small second salary can push part of your income into the next band.

Common mistakes

• Using the zero band twice. The Rs. 600,000 zero-rate band applies once, to total taxable income.
• Treating employer deductions as the final bill. They are credits under section 168(2), not a settlement.
• Not filing because tax was deducted. Section 114(1)(ab) ties the return obligation to taxable income, not to whether tax was deducted.

What to check in the official text

Read section 149(1) and (2) for how employers compute deductions, section 168(2), (3) and (5) for credit and refund, and section 114(1) for who must file. Take the rates from clause (2) of Division I, Part I, First Schedule. If your salary is not more than seventy-five per cent of your taxable income, clause (1) of the same Division applies instead.