Salary & Income · Section 61 · Tax Year 2026-2027
Donation Tax Credit Calculator
Work out the Section 61 credit for donations to approved institutions — worth your average tax rate on the eligible amount.
Step by step
How (A÷B)×C works
A ÷ B is your average rate
Tax before the credit, divided by taxable income.
C is the eligible donation
The donation, capped at 30% of income (20% for companies).
Multiply
The credit is your average rate applied to that eligible amount.
Subtract from tax
It reduces the tax bill directly, floored at zero.
Reading the result
Only approved institutions count
Generosity is not the test. The credit is available for donations to institutions approved under the Ordinance, and a donation to a deserving but unapproved cause produces no relief at all.
Check before giving if the credit matters to you. Large charities in Pakistan generally know their status and will say so; a receipt that does not mention it is worth querying, because the receipt is what you will rely on.
Keep the right paperwork
What supports a claim is a receipt in your name, identifying the institution, the amount and the date. A bank transfer with no receipt, or a cash donation with a handwritten slip, is difficult to sustain. Where the donation is substantial, pay by a traceable method.
A credit is not a refund of the donation
The relief reduces your tax by a proportion of what you gave — it does not give the money back. Donating to save tax always leaves you with less money than not donating. That is not an argument against giving; it is an argument against treating the credit as the reason.
Zakat is a separate relief
Zakat paid under the Zakat and Ushr Ordinance is treated differently from a Section 61 donation, and the two are claimed separately. Paying Zakat to an approved institution does not automatically convert it into a donation credit.
Where this stops
This computes the credit from the amount and income you enter. It does not confirm an institution's approved status, which is the part that decides whether the claim survives.
FAQs
Donation tax credit FAQs
Is the cap lower for donations to an associate?
Yes. Section 61(2) halves the ceiling when the donee is an associate of the donor: 15% of taxable income for an individual or AOP and 10% for a company, instead of 30% and 20%. Cash donations count only if paid by crossed cheque.
How is the donation credit calculated?
By the statutory formula (A ÷ B) × C, where A is the tax assessed before this credit, B is your taxable income and C is the eligible donation. A ÷ B is your average tax rate, so the credit is worth your average rate on the eligible amount — not a flat percentage, and not the whole donation.
Is my whole donation eligible?
Only up to a cap set as a share of taxable income — 30% for individuals and associations of persons, 20% for companies. Anything above the cap earns no credit. The calculator shows the cap, the eligible portion and any excess separately.
Does the donation have to go to an approved institution?
Yes. The credit is only available for donations to institutions listed in the relevant schedule or otherwise approved for this purpose. A donation to an unapproved body, however worthy, earns no credit — verify the recipient's approved status before claiming, and keep the receipt.
Is a credit the same as a deduction?
No, and the difference matters. A deduction reduces the income you are taxed on; a credit reduces the tax itself. Section 61 is a credit, which is why the calculation runs off your average tax rate rather than your marginal one.
Can the credit create a refund?
It reduces your tax, and cannot take your liability below zero — the calculator caps it at the tax assessed. If your tax has already been withheld during the year, a credit can leave you with tax overpaid; see the Tax Refund Estimator for that position.
Is this the same as Zakat?
No. Zakat is a religious obligation calculated on your wealth, and Zakat deducted at source under the Zakat and Ushr Ordinance has its own treatment. Section 61 is an income tax credit for donations to approved institutions. Paying Zakat does not automatically earn this credit.
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