What is Tax Credit on Investment in Pension Fund?
Under section 63 of income tax ordinance, a salaried person can avail tax credit
at an average rate of tax on lower of the below amounts:
A) Actual amount of investment in
Pension Fund;
B) 20% of your annual taxable income (salary).
Where average tax rate = tax liability for the year / taxable income (salary).
Withdrawal of Accumulated Balance from Pension Fund before Retirement:
The Pension Fund Manager shall deduct withholding tax at the rate equal to average tax rate
of the participant for preceding three years on any withdrawal from the fund.
Salary Tax Slabs For Tax Year 2025-26 (Direct Tax)
Salary is income under 600,000
If the annual salary income does not exceed PKR. 600,000 then the rate of the income tax is 0%
Salary income exceeds 600,000 but is under 1.2 Million
If the annual salary income exceeds PKR. 600,000 but does not exceed PKR. 1.2 million then the rate of income tax is 1% of the amount exceeding PKR. 600,000.
Salary income exceeds 1.2 Million but is under 2.2 Million
If the taxable annual income exceeds PKR. 1.2 million but does not exceed PKR. 2.2 million then the rate of income tax is PKR. 6,000 + 11% of the amount exceeding PKR. 1.2 million.
Salary income exceeds 2.2 Million but is under 3.2 Million
If the annual salary income exceeds PKR. 2.2 million but does not exceed PKR. 3.2 million then the rate of income tax is PKR 116,000 + 23% of the amount exceeding PKR. 2.2 million
Salary income exceeds 3.2 Million but is under 4.1 Million
If the annual salary income exceeds PKR. 3.2 million but does not exceed PKR. 4.1 million then the rate of income tax is PKR. 346,000 + 30% of the amount exceeding PKR. 3.2 million
Salary income exceeds 4.1 Million but is under 10 Million
If the annual salary income exceeds PKR. 4.1 million but does not exceed PKR. 10 million then the rate of income tax is PKR. 616,000 + 35% of the amount exceeding PKR. 4.1 million
Salary income exceeds 10 Million
If the annual salary income exceeds PKR. 10 million then the rate of income tax is PKR 616,000 + 35% of the amount exceeding PKR. 10 million + 9% surcharge on the tax payable amount