Four different authorities are checking four different things, on four different schedules, and none of them talk to each other.
FBR wants to know tax was deducted and deposited correctly, every month. EOBI wants its old-age benefit contribution registered and paid, every month. Whichever provincial social security institution applies — PESSI, SESSI, or the KP/Balochistan equivalents — wants its own contribution, on its own schedule. And the provincial labour department can show up for an inspection at any time and ask for employment records going back years.
Good HR software doesn’t simplify these rules. It just makes sure all four get applied correctly, every single pay cycle, without anyone having to re-derive them from memory.
Rates and ceilings change periodically. Always confirm the current EOBI wage ceiling and provincial social security percentage directly with EOBI (eobi.org.pk) or the relevant provincial institution before running payroll off this table.
| Obligation | Authority | Standard Rate | Calculated On | Frequency |
|---|---|---|---|---|
| EOBI | EOBI (Federal) | 5% employer / 1% employee | EOBI wage ceiling | Monthly, by the 15th |
| Social Security — Punjab | PESSI | Province-set, periodically revised | Wages up to provincial ceiling | Monthly |
| Social Security — Sindh | SESSI | Province-set, periodically revised | Wages up to provincial ceiling | Monthly |
| Social Security — KP | KP ESSI | Province-set, periodically revised | Wages up to provincial ceiling | Monthly |
| Social Security — Balochistan | Balochistan ESSI | Province-set, periodically revised | Wages up to provincial ceiling | Monthly |
| Income Tax | FBR | Progressive slabs, reset every Finance Act (1 July) | Projected annual salary | Monthly deduction; Form 149 filed monthly |
| Workers Welfare Fund | FBR / Provincial Revenue Authority | ~2% of accounting profit | Company profit | Annual |
| Gratuity | Standing Orders Ordinance | One month’s last salary per year served, from year 5 | Years of continuous service | At separation |
Why the EOBI ceiling trips people up: the 5% employer share is meant to apply to a fixed government wage ceiling, not whatever an individual earns. A spreadsheet without that rule hard-coded will keep applying 5% to full salary, overpaying on every employee above the ceiling — and EOBI audits check for exactly this. ( See how cloud payroll software with native EOBI/PESSI handling applies these rates automatically instead of requiring manual updates each Finance Act.
Why “social security” isn’t one number: a company paying staff in Lahore and Karachi is registered under PESSI for one group and SESSI for the other, with separate filings for each. Treating it as a single blended percentage is the second most common error after the EOBI one.
Labour audits and FBR reviews are predictable. They want: monthly payroll registers, proof of EOBI and social security deposits, FBR withholding statements and salary certificates (Form 16), signed employment contracts, leave records, and gratuity calculations for anyone who’s left.
Most companies that fail an audit aren’t non-compliant in principle — they just can’t produce the proof fast enough. A single late or wrong filing, plus the accountant time to fix backdated records, usually costs more than a year of decent payroll software. That’s the actual ROI argument, not a sales pitch.
Skip the demo script and check these directly:
None of this changes what Pakistani law requires. It changes whether that requirement actually gets met every month without depending on one person’s spreadsheet habits. The failure pattern is always the same: EOBI on the wrong base, provincial social security treated as one number instead of several, tax slabs left stale past July 1, and records too scattered to produce on short notice. Software built specifically around Pakistan’s compliance rules — not retrofitted from a generic international platform — closes each of these gaps directly.
PayPeople runs this compliance logic natively: EOBI, SESSI/PESSI, and FBR handling built in, with audit-ready reporting and a Pakistan-based support team. Book a free demo or message WhatsApp +92 300 0800498 and run it against your own payroll.
5% from the employer, 1% from the employee, applied to the EOBI wage ceiling — not the employee's actual salary. A properly built system hard-codes that ceiling so the contribution stays correct no matter how high a salary goes, and updates automatically when EOBI revises the figure.
It needs to. Punjab runs PESSI, Sindh runs SESSI, and KP and Balochistan have their own institutions again. A system that only outputs one blended "social security" number isn't built for a multi-province workforce — it needs location-based rules per employee and separate filings per province.
Every payroll run after that date inherits the error, because the new Finance Act takes effect July 1 but the budget itself often passes in June. The gap compounds across the tax year until someone catches it, and the correction can draw more scrutiny than the original mistake.
No. No law mandates the software itself — what's mandatory is accurate tax deduction, EOBI registration, and proper records. A company can technically do this by hand. In practice, that stops being reliable somewhere around 20–30 employees, where software shifts from convenience to risk management.
Payroll registers, proof of EOBI and social security payments, FBR withholding statements, signed contracts, and leave records. Inspections are rarely lost on whether a company followed the rules — they're lost on whether it can prove it quickly.
It should. One month's last-drawn salary per completed year of service from year five, under the relevant Standing Orders provisions. The useful version of this tracks the liability continuously instead of only computing it the day someone resigns.
No — separate obligation, roughly 2% of accounting profit, filed annually rather than monthly. It gets missed precisely because it isn't part of the monthly payroll rhythm the way EOBI and tax withholding are.
