Tax guides
Tax deductions and credits in Pakistan
A practical guide to the difference between deductions and tax credits, common relief categories, evidence to retain, and where to enter a claim in IRIS.
01 · Before you claim
Check the rule for your tax year
Eligibility, limits and calculation methods can change by tax year. Confirm the applicable law for the year you are filing and retain evidence for every claim.
Deduction vs tax credit
Deduction
Reduces the income on which tax is calculated.
- Gross income
- Less eligible deduction
- Taxable income
Tax credit
Reduces calculated tax, subject to the statutory formula and limits.
- Calculated tax
- Less eligible credit
- Tax payable
A deduction and a tax credit are not interchangeable.
Common relief categories
| Payment or potential relief | Typical evidence | Verify |
|---|---|---|
| Zakat | Zakat certificate and proof of payment. | Section 60 |
| Approved charitable donations | Receipt and evidence that the recipient has the required approval status. | Section 61 |
| Approved pension contributions | Pension provider statement and proof of payment. | Section 63 |
| Eligible tuition fees | Fee receipts, institution details and the child’s identifying information. | Section 60D |
Deduction
Zakat
May reduce taxable income when the payment qualifies under section 60.
Keep: Zakat certificate and proof of payment.
Verify Section 60Tax credit
Approved charitable donations
May reduce calculated tax under the section 61 formula and limits.
Keep: Receipt and evidence that the recipient has the required approval status.
Verify Section 61Tax credit
Approved pension contributions
May reduce calculated tax for qualifying contributions, subject to section 63 limits.
Keep: Pension provider statement and proof of payment.
Verify Section 63Deduction
Eligible tuition fees
Section 60D has changed over time. Confirm that the provision applies for your tax year and that its income and formula conditions are met before claiming.
Keep: Fee receipts, institution details and the child’s identifying information.
Verify Section 60DNot every personal expense is deductible
Tuition-fee relief should be checked against the law for the tax year because section 60D has changed over time. Housing-finance relief follows separate rules. Medical costs, general insurance and ordinary household spending do not automatically create a claim.
Worked example: why the distinction matters
- Income
- PKR 2,400,000
- Less eligible deduction
- PKR 100,000
- Tax is first calculated on
- PKR 2,300,000
- Then
- Any eligible tax credit is applied to the calculated tax.
Illustration only. The statutory formula, eligibility rules and limits determine the actual relief.
Records to keep
- Payment receipt
- Recipient approval evidence
- Bank transaction
- CNIC or NTN details
- Provider statement
- Calculation worksheet
FBR guidance says people with taxable income should retain income-tax return records for six years. Keep them longer while a related proceeding or appeal remains pending.
Claiming relief in IRIS
- 1
Choose the correct tax year
- 2
Enter the relevant deduction or credit
- 3
Reconcile withholding and tax
- 4
Review the claim and evidence before submission
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