← All posts
Tax-Saving Tips for Pakistani Salaried Employees
Section 60-63 rebates, medical allowance exemptions, and other legitimate ways to reduce your bill.
Pakistan's tax code has a handful of legitimate deductions, credits, and structuring options that can knock 10–20% off most salaried tax bills. Here are the ones worth your time.
The high-impact moves
- Voluntary Pension Scheme (VPS): up to 20% of salary contributed, with a tax credit on the contribution.
- Zakat: paid via banking is automatically deductible — no extra paperwork.
- Donations to Section 61 / Schedule 2 charities: tax credit at average rate.
- Mutual funds (Section 62): credit on equity-fund investments held for 2+ years.
A VPS contribution of PKR 200,000 by a high-bracket salaried earner can reduce tax by PKR 50,000+. Set it up before June 30 to count for that tax year.
20%
Max VPS contribution as % of salary
PKR 50k+
Typical tax saved by maxing VPS at top bracket
June 30
Cut-off for tax-year contributions
Common pitfalls
Receipts matter. FBR routinely asks for proof of charitable donations and VPS contributions. Keep digital scans for at least 6 years.
Frequently asked questions
Are insurance premiums deductible?
Life insurance premiums under certain employer schemes can qualify for tax credit, but personal life insurance generally does not.
Can I claim home loan interest?
Yes — Section 64A allows interest paid on a residential mortgage to be deducted, capped at PKR 2 million per year.
See how much these tips can save you
Plug numbers into the calculator before and after the deduction to see the gap.
Open calculator →