Tax Saving Investment Calculator Pakistan

Inputs used

Annual taxable income(B)

PKR 3,000,000

Contribution to approved pension fund(paid in the year)

PKR 300,000

Tax year

Tax Year 2027 (Jul 2026 – Jun 2027)

Formula

Section 63 grants a TAX CREDIT, not an income deduction. The credit is (A ÷ B) × C, where A is the tax assessed before the credit, B is your taxable income, and C is the lesser of what you contributed and 20% of B. Because A ÷ B is your average tax rate, relief is given at the average rate — not at your top marginal rate.

Step by step

1. 1. Tax before the credit (A)PKR 276,000
   Progressive slabs for Tax Year 2027 applied to PKR 3,000,000
2. 2. Statutory contribution limit — 20% of taxable incomePKR 600,000
   20% × PKR 3,000,000
3. 3. Eligible amount (C) — the lesser of the twoPKR 300,000
   min(PKR 300,000, PKR 600,000)

   Your contribution is within the 20% limit, so all of it qualifies.

4. 4. Average tax rate (A ÷ B)9.20%
   PKR 276,000 ÷ PKR 3,000,000
5. 5. Tax credit — (A ÷ B) × CPKR 27,600
   9.20% × PKR 300,000

Reconciliation

Rounding

Nothing is rounded during the calculation — every step carries full precision and only the displayed figures are rounded to the nearest rupee. Your assessed tax may differ by a rupee or two from rounding applied at a different point.

Sources & status

• Income Tax Ordinance 2001 — tax credit for approved pension fund contributionsEnacted law

  s.63, Part X (Tax Credits) · Tax Year 2027

• Finance Act 2026Enacted law

  salary tax slabs · Tax Year 2027 · effective 2026-07-01 · checked 2026-07-15