GenzeeTax Deduction Calculator
See how deductible amounts — pension contributions, approved donations, exempt allowances — reduce your taxable income and your Pakistan income tax for FY 2026-27.
Annual tax after deductions
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Deductions: the legal way to pay less tax
Income tax is charged on taxable income, not on everything you receive. Amounts the law treats as exempt or deductible — certain retirement-fund contributions, some allowances within limits, donations to approved charities (which work through tax credits) — reduce the income the slab rates apply to. Because Pakistan's slabs are progressive, a deduction saves tax at your highest marginal rate: for someone in the 20% slab, every deductible PKR 100,000 keeps PKR 20,000 in their pocket.
How to use this calculator
Enter your gross salary (monthly or annual), then the annual amounts you expect to deduct or exclude: provident/pension fund contributions, the exempt portion of a medical allowance, and anything else your circumstances allow. The tool computes your taxable income and applies the FY 2026-27 salaried slabs — the same enacted rates as our salary tax calculator — showing tax with and without the deductions, and the saving.
The arithmetic
tax saved = tax(gross) − tax(taxable)
Worked example
Hassan earns PKR 250,000 a month (PKR 3,000,000 a year). His employer's recognised provident fund takes PKR 200,000 a year of his own contribution, and PKR 100,000 of his package is an exempt medical allowance. Taxable income: 3,000,000 − 300,000 = PKR 2,700,000. Tax on 3,000,000 would be 276,000; tax on 2,700,000 is 116,000 + 20% × 500,000 = PKR 216,000. The deductions save him PKR 60,000 a year — exactly 20% of the deducted amount, his marginal rate.
What can actually be claimed?
The details matter and change with budgets, but the recurring categories for salaried Pakistanis are: contributions to recognised provident/pension funds (within statutory limits), the exempt portion of medical allowance where medical facilities aren't provided (commonly up to 10% of basic salary), and tax credits — computed differently from deductions — on donations to approved non-profits under section 61. Zakat paid through the official deduction system also reduces taxable income. Keep evidence for everything: fund statements, donation receipts with the charity's approval number, and your salary certificate. Our article on deductions and credits in Pakistan walks through each category.
Frequently asked questions
What's the difference between a deduction and a tax credit?
A deduction reduces taxable income before slab rates apply, saving tax at your marginal rate. A credit reduces the computed tax directly, usually in proportion to your average rate. Donations in Pakistan work as credits under section 61.
Is my provident fund contribution deductible?
Contributions to a recognised provident fund enjoy favourable treatment within statutory limits, and employer contributions within limits aren't taxed as your income. The exact caps depend on current law — check with your HR or a tax practitioner.
How much medical allowance is tax-free?
Commonly, medical allowance up to 10% of basic salary is exempt where the employer doesn't provide medical facilities or reimbursement. If actual medical expenses are reimbursed against bills, different rules apply.
Do deductions get applied automatically in my payslip?
Employers factor in exemptions they administer (like provident fund), but credits for personal donations usually must be claimed — either by informing your employer or when filing your annual return.
Can deductions bring my tax to zero?
If deductions push taxable income below PKR 600,000, the slab tax is zero. But deductions can't exceed what the law allows, and claiming unsupported amounts invites penalties — deduct only what you can document.