Labels

How to Save Income Tax in Pakistan with Pension Fund Investment

 


Want to Save Income Tax in Pakistan? Here’s How Pension Fund Investments Can Help

If you're searching for ways to save tax in Pakistan, here’s one of the most effective strategies: Invest in an approved pension fund and avail income tax rebate under Section 63 of the Income Tax Ordinance, 2001.

This tax-saving investment option is ideal for salaried individuals, freelancers, and business owners who want to plan for retirement while reducing their tax liability.

What Is Section 63 of the Income Tax Ordinance?

Section 63 of Pakistan’s Income Tax Ordinance offers a tax credit on the amount you invest in a Voluntary Pension Scheme (VPS). This allows you to legally reduce your annual income tax while securing your financial future.

If you're exploring best investment options in Pakistan or searching “how to save tax legally in Pakistan,” this is your answer.

How Much Tax Can You Save?

  • ✅ Contribution Limit: Up to 20% of your taxable income

  • ✅ Tax Benefit: Tax credit equals your investment multiplied by your average tax rate

  • ✅ Minimum Holding: 2 years to retain the tax benefit

📊 Example for Salaried Individual:

If your annual income is PKR 1,000,000 and you invest PKR 200,000 in a registered pension fund, you could get a tax credit of around PKR 4,000.

Benefits of Pension Fund Investment in Pakistan

  • 💼 Reduce income tax legally

  • 📈 Grow wealth through long-term investment

  • 👵 Build a retirement fund in Pakistan

  • 🔒 Enjoy tax-free growth within the fund

  • 📅 Flexibility to contribute monthly or yearly

How to Claim Your Tax Credit?

  1. Choose an approved pension fund

  2. Invest before 30th June to claim benefit for the current tax year

  3. Inform your employer (if salaried)

  4. File your tax return and claim credit under Section 63

Pro tip: Use a tax credit calculator for pension contributions or consult your investment advisor.

Who Can Benefit From Section 63?

This tax-saving option is suitable for:

  • ✅ Salaried professionals

  • ✅ Freelancers and consultants

  • ✅ Entrepreneurs and business owners

  • ✅ Anyone looking for long-term tax saving investments in Pakistan

Final Thoughts: Combine Tax Saving With Smart Investing

If you’ve been searching for how to save tax on salary in Pakistan, this is your best legal and smart option. Investing in a pension fund under Section 63 not only reduces your income tax but also helps you grow your savings for retirement.

This is not an investment advice. All investments in Mutual funds and Pension Funds are subject to market risks. Please read the offering documents before making any investment decision. For latest returns please view respective funds fund managers reports.

Labels:

Comments

Post a Comment

Popular Posts