Tax Rebates Pakistan 2025-26 — Sections 60, 61, 62, 63 (Complete)

Pakistan's Income Tax Ordinance includes four key rebate provisions that legitimately reduce your tax liability. Most salaried employees are unaware of these.

Section 60 — Zakat

Zakat paid to approved organizations is fully deductible from taxable income. Documentation: receipts from approved Zakat collectors. There is no upper limit on the deduction.

Section 61 — Charitable Donations

Donations to approved charities (under Section 2(36)) are tax-deductible up to 30% of taxable income for individuals. The charity must be on FBR's approved list. Get a receipt with the charity's NTN number.

Section 62 — Investment in Shares & Sukuks

Investment in initial public offerings (IPOs) of listed companies and sukuks qualifies for a tax credit. Limit: lower of 20% of taxable income, PKR 2 million, or actual investment amount. The shares must be held for at least 24 months.

Section 63 — Pension Fund (Voluntary Pension Schemes)

Contributions to approved Voluntary Pension Schemes (VPS) qualify for a tax credit at the average rate × the contribution amount. Limit: lower of 20% of taxable income or actual contribution. The most powerful rebate for high-earners — at top bracket, every PKR 100k contributed saves up to PKR 35k in tax.

Frequently asked questions

Are these deductions or tax credits?

Section 60 is a deduction (reduces taxable income). Sections 61, 62, and 63 are tax credits at the average rate (reduce tax payable directly). Tax credits at the average rate are powerful because the saving applies regardless of which marginal bracket you are in.