Per diem and daily allowance policy for Pakistani companies
A per diem is a fixed daily allowance for meals and incidental costs while travelling. It saves paperwork and treats travellers consistently, but only if the rates are fair and the rules are clear. This guide sets out the choices; the rates themselves are for your company to decide.
Three ways to pay daily costs
Most companies choose one model for domestic and another for international trips.
| Model | How it works | Best for |
|---|---|---|
| Flat per diem | A fixed daily amount by city or country; no meal receipts. | Frequent field travel and simple administration. |
| Actual costs with a cap | Receipts required; reimbursed up to a daily limit. | Senior staff, client entertaining and audit-heavy sectors. |
| Hybrid | Flat rate for meals and incidentals; actual costs for hotels and transport. | Most international travel. |
| Donor or government rates | Rates set by the funder or by government rules. | Donor-funded projects and public bodies. |
Set rates by place, not by grade alone
Costs in Karachi, Dubai, London and Shenzhen are very different. Set international rates by country or city band, and domestic rates by city tier. If grades matter, use a small multiplier rather than a separate table for each grade.
Decide what the per diem covers (breakfast, lunch, dinner, local transport, tips, laundry) and what to deduct when a meal is provided by a hotel, airline or event.
- Rates by city band for international travel
- Deduct provided meals by a set percentage
- Partial days for departure and return
Foreign currency and exchange rates
For international trips, state whether the per diem is paid in PKR or foreign currency, and which exchange rate applies, for example the State Bank of Pakistan rate on the day of payment. Keep the rule simple and consistent.
Check the tax position
Allowances can have tax consequences for employers and employees. Rules change, so take advice and check the Federal Board of Revenue’s current guidance before setting or changing rates. Donor-funded projects should follow their funder’s rules.
Cash advances and settlement
If you pay per diem in advance, set a deadline to settle after the trip and a process for trips cut short or extended. Many companies now pay to a card or account rather than in cash, which keeps a clearer record.
How Go Global puts it into practice
Review
We compare your current rates and rules.
Model
Choose flat, actuals or hybrid.
Bands
Set city and country bands.
Apply
Rates linked to each trip.
Report
Allowance spend by team and destination.
Per diem policy: questions
What is a per diem?
A fixed daily allowance for meals and incidental costs while travelling, paid instead of reimbursing each receipt.
Do we need receipts for a per diem?
Usually not for the flat element. Hotels and transport are normally reimbursed against receipts or booked directly.
Are per diems taxable in Pakistan?
That depends on current rules and how the allowance is structured. Take tax advice and check the FBR’s guidance.
How often should rates be reviewed?
At least once a year, and sooner when exchange rates or prices move sharply.
Planning a travel policy?
Tell us who is travelling, when and why. We reply with a plan, the visa route and a quote. Go Global has handled 100,000+ trips, and our team works 24/7 for travellers on the road. Email insights@goglobal.pk or WhatsApp 0320-4111222.