Salary & Income · Sections 60, 60D, 61, 63 and 63A · Tax Year 2026-2027
Tax Saver Calculator Pakistan 2026-27: How Much Pension, Donations and Zakat Can Save
Five reliefs in the Income Tax Ordinance reduce an individual’s tax, and each has a cap and a cost. Enter your income and what you could put into each, and see the tax before and after, how much room is left under every cap, and what each rupee paid out saves. On Rs 3,000,000 of salary the tax is Rs 276,000; the pension, donation and home loan credits at their caps would take up to Rs 220,800 off it, and Rs 100,000 of Zakat saves Rs 20,000 more. Nothing you type leaves your browser.
Tuition fee, section 60D (income under Rs 1,500,000)
Relief by relief
What each relief saves, and how much room is left
| Relief | Provision | How it works | Paid out | Tax saved | Headroom |
|---|---|---|---|---|---|
| Zakat | Section 60 | Allowance, no cap | Rs 100,000 | Rs 20,000 | Off taxable income at your marginal rate |
| Tuition fee | Section 60D | Allowance, three caps, income under Rs 1.5m | Rs 0 | Rs 0 | Nothing entered |
| Approved pension fund (VPS) | Section 63 | Credit, up to 20% of taxable income | Rs 600,000 | Rs 51,200 | Capped: only Rs 580,000 counts |
| Donations to approved recipients | Section 61 | Credit, up to 30% of taxable income | Rs 300,000 | Rs 26,483 | Another Rs 570,000 would save Rs 50,317 more |
| Profit on a low-cost home loan | Section 63A | Credit, up to 30% of taxable income | Rs 0 | Rs 0 | Room for Rs 870,000, worth Rs 76,800 |
| Together | — | — | Rs 1,000,000 | Rs 97,683 | Tax Rs 276,000 becomes Rs 178,317 |
Until you enter your own figures this shows Rs 3,000,000 of salary with Rs 100,000 of Zakat, Rs 600,000 into a pension fund and Rs 300,000 of donations: Rs 1,000,000 paid out, Rs 97,683 of tax saved. Zakat comes off first, so the credits run on Rs 2,900,000, and the pension cap is 20% of that, Rs 580,000.
Worked examples
Rs 100,000 of Zakat against Rs 100,000 into a pension fund
| Salary for the year | Average rate | Zakat Rs 100,000 saves | Pension Rs 100,000 saves |
|---|---|---|---|
| Rs 1,800,000 | 4.00% | Rs 11,000 | Rs 4,000 |
| Rs 3,000,000 | 9.20% | Rs 20,000 | Rs 9,200 |
| Rs 4,800,000 | 15.50% | Rs 29,000 | Rs 15,500 |
| Rs 7,200,000 | 20.75% | Rs 35,000 | Rs 20,750 |
| Rs 12,000,000 | 26.45% | Rs 35,000 | Rs 26,450 |
The allowance saves more in every row: it is worth the marginal rate of the slab the income sits in, while a credit is worth the average rate across all the slabs below. The gap closes as income rises and the average rate approaches the top rate. Neither saving is the point of the payment: Zakat is an obligation, a pension contribution is money set aside for retirement, a donation is given away. The calculator shows what the tax system adds back.
Step by step
How the saving is worked out
Allowances come off income
Zakat in full, then the tuition fee allowance within its three limits, if taxable income is under Rs 1,500,000.
The slabs run on what is left
That tax is A; the reduced income is B. Together they are your average rate.
Each credit is A ÷ B × C
C is the lesser of what you paid and the cap: 20% of B for a pension fund, 30% for donations and for a home loan’s profit.
Headroom and cost
How much more each cap would allow and what it would save; and the saving divided by everything paid out.
Reading the result · Tax Year 2026-2027
Three caps, one average rate, and a saving that is never the whole payment
Pakistan’s reliefs for an individual are few and bounded. The Finance Act 2022 removed the section 62 credit for shares, sukuk and life insurance, so the credits that remain are for a pension fund, for giving, and, since the Finance Act 2025, for the profit on a loan for one modest house. All three use the same formula, your average rate times the eligible amount, and the eligible amount stops at 20% or 30% of taxable income. The headroom column shows how far you are from each cap, because a contribution above it earns nothing more that year.
Why Zakat looks better than a pension contribution
Zakat is a deductible allowance, so it comes off the income before the slabs run and saves tax at the rate of the top slab you are in. A credit is worth the average rate, which is always lower on a progressive scale. The comparison table makes the point at five incomes, and the gap narrows as the average rate climbs towards the top rate.
Saving per rupee
Every relief here costs more than it saves, by design: the tax saved is a fraction of the amount paid out. The figure tells you what the Ordinance adds back on each rupee you were going to pay anyway, in Zakat, in retirement saving, in giving, in a home loan. It is not a reason to pay out money you would not otherwise pay.
Where this stops
The calculator applies the five provisions to one year’s figures on the Tax Year 2026-2027 slabs. It does not model the 15% limit on donations to an associate, the Workers’ Welfare Fund and Workers’ Participation Fund allowances (business payers; see the tax credits and allowances calculator), a company’s 20% donation limit, tax already deducted at source, or the eligibility conditions in detail: an approved pension fund under the Voluntary Pension System Rules 2005, a recipient approved under section 2(36) or named in the Thirteenth Schedule, a loan from a scheduled bank or other named lender for a house within the size limits. The donation tax credit calculator has the section 61 detail.
Sources
Where these rules come from
Sections 60, 60D, 61, 63, 63A and 149 are read from FBR’s consolidated Income Tax Ordinance, amended up to 30 June 2026; section 63A was inserted by the Finance Act 2025 and section 62 omitted by the Finance Act 2022. The slabs are the First Schedule tables for Tax Year 2026-2027, the same data every income tax page on this site uses, checked against KPMG’s brief on the Finance Act 2026. How rules are checked is in the editorial policy; if something looks wrong, report it with the source.
FAQs
Saving tax in Pakistan: questions people ask
How can a salaried person save tax in Pakistan?
Through the reliefs the Income Tax Ordinance gives an individual: Zakat paid under the Zakat and Ushr Ordinance comes off taxable income in full (section 60); tuition fee comes off it within limits if taxable income is under Rs 1,500,000 (section 60D); and three credits come off the tax itself at your average rate, for a contribution to an approved pension fund up to 20% of taxable income (section 63), donations to approved recipients up to 30% (section 61), and profit paid on a loan for one low-cost house or flat up to 30% (section 63A). On Rs 3,000,000 of salary the tax is Rs 276,000; the three credits at their caps would take up to Rs 220,800 off it.
What is the maximum tax I can save with a pension fund?
The credit is your average rate times the lesser of the contribution and 20% of taxable income, so the most it can be is 20% of your tax. On Rs 3,000,000 that is a contribution of Rs 600,000 for a credit of Rs 55,200; anything above the cap earns no further credit in that year.
Do donations reduce my tax rupee for rupee?
No. A donation to an approved recipient earns a credit at your average rate on the amount given, up to 30% of taxable income (section 61). On Rs 3,000,000 of salary a Rs 300,000 donation brings the tax down by Rs 27,600, so the gift costs Rs 272,400 after tax. Gifts to an associate are limited to 15% of taxable income, which this calculator does not model.
Is an allowance worth more than a credit?
Rupee for rupee, yes. An allowance such as Zakat reduces the income the slabs run on, so it saves tax at your marginal rate; a credit reduces the tax at your average rate, which on these slabs is lower. Rs 100,000 of Zakat on Rs 12,000,000 saves Rs 35,000; a Rs 100,000 pension contribution saves Rs 26,450.
Does the calculator include Section 62 on shares and insurance?
No. Section 62, the credit for new shares, sukuk and life insurance premiums, was omitted by the Finance Act 2022 and cannot be claimed for Tax Year 2026-2027. Section 63 for pension funds was never withdrawn and is the credit that remains for savings.
Can my employer apply these during the year?
Section 149(1) tells an employer to adjust the tax deducted from salary for the credits under sections 61 and 63 after obtaining documentary evidence, so a pension contribution or a donation can reduce monthly deductions if you give your employer the proof. Section 63A and the tuition fee allowance are not named there and are claimed in the return.
What is "saving per rupee"?
The tax saved divided by what you paid out to get it. It shows the reliefs for what they are: a pension contribution is your own money kept, a donation is money given away; neither is free because it saves tax. On Rs 3,000,000 with Rs 100,000 of Zakat, Rs 600,000 into a pension fund and Rs 300,000 of donations, the Rs 1,000,000 paid out saves Rs 97,683 of tax.
Is my information stored anywhere?
No. The calculator runs in your browser with the slab tables built into the page. Nothing you type is sent, stored or logged, and this page's code sets no cookies.
Related tools
Claiming these on the return?
The tax credits and allowances calculator works each provision out in full, with the Workers’ funds and the AOP rules.
Open the tax credits and allowances calculator