Hike percentage and the after-tax monthly increase.
Salary hike
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After-tax monthly gain
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Gross monthly gain
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The headline percentage is the easy part
When an offer letter or appraisal lands, the first number anyone reaches for is the percentage. The arithmetic is simple: take the rise, divide it by what you earned before, and you have your hike. A jump from PKR 2.4 million to PKR 3 million a year is a 25 percent hike, full stop. That is the figure you quote to friends and the one HR puts in the letter. The trouble is that it describes your gross pay, not your pocket, and in Pakistan the gap between the two widens the higher you climb because income tax runs on progressive slabs.
This calculator does two jobs at once. It returns the clean percentage so you can sanity-check the offer, and then it runs both your old and new salary through the salaried income tax slabs to show what actually reaches your bank account each month. You can enter annual or monthly figures; the tool annualises monthly inputs by multiplying by twelve before it touches the tax math.
Why the after-tax gain trails the gross rise
Pakistan taxes salaried income in bands. The first PKR 600,000 a year is tax free, the next slice carries a low rate, and each higher slice is taxed harder, climbing to the top salaried rate the calculator applies on income above PKR 4.1 million. Because a raise sits on top of everything you already earn, it is taxed at your highest occupied band, not your gentle average. So the extra rupees are the most heavily taxed rupees you own. That is the mechanism behind the smaller monthly figure the tool reports. The structure is set by the Federal Board of Revenue (FBR) and the rates move with each year's Finance Act, so confirm the current slabs before you treat any figure as final.
A 25 percent hike, traced to take-home
Take the default. Your salary goes from PKR 2.4 million to PKR 3 million a year, a gross rise of PKR 600,000, which is PKR 50,000 a month. At the rates this calculator applies, tax on PKR 2.4 million is PKR 162,000 and tax on PKR 3 million is PKR 300,000. So your after-tax pay rises from PKR 2,238,000 to PKR 2,700,000, a net gain of PKR 462,000 a year, or PKR 38,500 a month. The headline says 25 percent; the money in hand grows by PKR 38,500 rather than the PKR 50,000 the gross rise implied.
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The chart puts the gross monthly rise next to the net one. The shaded slice that goes missing is the tax the higher slabs take on the new money.
Reading the result like a negotiator
If you are weighing one offer against another, the percentage can mislead. A 30 percent hike that pushes you into a higher band may deliver less extra cash than a 25 percent hike that does not. The honest comparison is the net monthly gain, which is why that box sits front and centre. A practical tip when you negotiate: ask whether the figure on the table is your gross cost-to-company or your base salary, because allowances, bonuses, and any provident fund contribution change the taxable number and therefore the slab you land in.
One common mistake is to read this tool as a full payslip. It compares income tax only. It does not subtract your provident fund contribution, EOBI, or any Zakat deduction your bank applies, and it assumes the salaried rate card, which the FBR allows when salary is more than three quarters of your taxable income. If a large share of your package is variable or you also run a side business, your real marginal position may differ.
Who gets the most from this
This is built for anyone staring at an appraisal letter or a counter-offer who wants to know, in plain rupees, what the raise is worth after tax. It suits salaried professionals first. If you instead want to see the net gain framed as the share of the raise you keep, the salary increment tax calculator does exactly that, and the marginal rate calculator shows the top band each rupee falls into.
Is a salary hike percentage calculated on gross or net pay?
By convention the hike percentage is calculated on gross salary, which is why this tool reports it that way. Net pay rises by a smaller percentage because the extra income is taxed at your top slab. If you want the net percentage, compare the two after-tax figures the calculator shows rather than the gross headline.
Does a bigger raise always mean a bigger percentage hike?
Not relative to your base. A PKR 600,000 raise is a 30 percent hike on a PKR 2 million salary but only a 20 percent hike on a PKR 3 million one. The same rupee amount looks smaller as a percentage the more you already earn, which is why two people quoting very different percentages can be getting the identical cash increase.