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Fund Tax Saver

Salaried in Pakistan? Contributing to a pension fund (VPS) earns you a tax credit under Section 63 — worth up to a 20% cut in your tax bill.

PKR
PKR

Bonus counts as salary income under Section 12, so it’s taxed at the same slab rates — include it here.

Taxable incomePKR 3,000,000
PKR 600,000
PKR 0max 20%
You could save
PKR 0
that’s a 0% cut in your tax bill
Taxable incomeSalary + bonus–
Tax without a VPS–
Your average tax rateTax ÷ taxable income. Section 63 gives relief at this rate — not your top slab rate.–
Eligible contributionThe lower of what you contribute and 20% of taxable income–
Section 63 tax credit–
Tax after investing–
Why isn’t the saving bigger? The law computes the credit as (A ÷ B) × C — your tax (A) over your taxable income (B), times the eligible contribution (C). That means relief comes at your average rate, not the top slab rate you pay on your last rupee. Contributing the full 20% always lands the credit at 20% of your tax.

Based on salaried slabs for Tax Year 2026. Section 63 gives a tax credit for contributions to an Approved Pension Fund (VPS), capped at 20% of taxable income. Tax figures include the 9% surcharge where taxable income exceeds Rs 10m; the credit itself is computed on slab tax, which is the conservative reading. Note the credit for investing in shares/mutual funds (Section 62) was withdrawn in 2022 — VPS is the route that still carries relief. Additional allowances may apply for older contributors. This is guidance, not tax advice — confirm with a tax advisor and check the current Finance Act before filing.