Tax Deductions & Credits in Pakistan
Learn which FY 2026–27 reliefs reduce taxable income, which reduce tax payable, and what evidence supports a valid claim.
Before you claim
Eligibility, limits and calculation methods can change by tax year. Confirm the applicable section and retain evidence.
Deduction vs tax credit
Deduction
Reduces the income on which tax is calculated.
Tax credit
Reduces calculated tax, subject to the statutory formula and limits.
They are not interchangeable.
Find the relief that matches your payment
Zakat paid under the Zakat and Ushr law
- Typical evidence
- Zakat certificate
- Verify
- Section 60 eligibility
Donation to an approved institution
- Typical evidence
- Receipt + approval status
- Verify
- Section 61 formula and limits
Contribution to an approved pension fund
- Typical evidence
- Provider statement
- Verify
- Section 63 eligibility and limits
Tuition fee that meets the education-expense rules
- Typical evidence
- Fee receipt + institution details
- Verify
- Section 60D income and formula limits
Common relief categories
Zakat
What it may do
A deductible allowance that may reduce taxable income under section 60.
Evidence to keep
Zakat certificate and payment proof.
Approved charitable donations
What it may do
A tax credit calculated under the section 61 formula and limits.
Evidence to keep
Receipt and approval evidence of the institution.
Approved pension contributions
What it may do
A tax credit for qualifying contributions, subject to section 63 limits.
Evidence to keep
Provider statement and payment proof.
Eligible tuition fees
What it may do
A deductible allowance where section 60D income and formula conditions are met.
Evidence to keep
Fee receipts, institution details and the child’s identifying information.
Not every personal expense is deductible
Tuition fees qualify only when section 60D conditions are met, and profit paid on qualifying low-cost housing finance follows separate credit rules. Medical costs, general cover premiums and ordinary household spending do not automatically qualify.
Worked example: why the distinction matters
An eligible tax credit is then applied to calculated tax
Illustration only—the statutory formula and limits determine the actual credit.
Records to keep
- Payment receipt
- Recipient approval evidence
- Bank transaction
- CNIC / NTN details
- Provider statement
- Calculation worksheet
FBR says people with taxable income should keep income-tax return records for six years. Retain the evidence for every relief with those records.
Claiming relief in IRIS
- 1
Choose tax year
- 2
Enter the relevant deduction or credit
- 3
Reconcile withholding and tax
- 4
Review evidence before submission
Continue learning
Build on this guide with the next practical topics.