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Deductible Allowance for salaried persons u/s 60

This Article describes the Deductible Allowance for salaried persons u/s 60 which only can avail by the filer salary persons. In order to calculate your tax payable upon salary income, you can use our salary tax calculator. You can play around with different tax years as the government has not been introduced any changes from 2020 salary tax slabs for 2021 tax year salary tax slabs. Every [person or institution responsible] who paying salary to an employee shall, at the time of payment, deduct tax from the amount paid to the employee as per the salary tax slabs. These rates are specified in Division I of Part I of the First Schedule on the estimated income of the employee chargeable under the head “Salary” for the tax year. In which the payment is made after making [adjustment of tax withheld from the employee under other heads and tax credit admissible under section 61, 62, 63 and 64 during the tax year after obtaining documentary evidence], as may be necessary, for

  • tax withheld from the employee under this Ordinance during the tax year;
  • any excess deduction or deficiency arising out of any previous deduction; or
  • failure to make deduction during the year;

Deductible Allowance for salaried persons u/s 60 are deductions from salary income to arrive at the taxable salary. Where as tax credits are used to reduce tax liability also on following employees benefit.


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Zakat paid u/s 60

FBR IRIS set guidelines on the Amount of Zakat paid in the tax year is a deductible allowance from taxable remuneration. Necessities with respect to the verification of the payment are not recommended anyway zakat beneficiary should be a “registered” good cause to stay away from the chance of dismissal of the case.

Zakat is treated as applicable tax deductions on salary income. Special straight deduction is available for Zakat paid under the Zakat and Usher Ordinance. A rebate at the average rate of tax is allowed on donations made to any approved non-profit organization on the lower of donation value and 30% of the individual’s taxable income. In case of donations made by individual to an associate, the amount of donations qualifying for tax credit would be restricted to 15% of the individual’s taxable income.

Individuals are also allowed a straight deduction against taxable income in case of donations made to certain approved institutions. However, in case of donations made to an associate the said deduction is restricted to 15% of the individual’s taxable income for the year. Be cautious, the resources on which Zakat is being guaranteed are appropriately reflected in the wealth statement.

Worker’s Welfare Fund (u/s 60A)

Any contribution by the employer in worker welfare fund treated as an employees benefit. FBR IRIS has affirmed that an individual will be qualified for a deductible remittance for the measure of any Workers’ Fund paid by the individual in the tax year under the Workers’ Welfare Fund Ordinance, 1971. WWF is chargeable and payable alongside the income tax return of an individual.

Education expenses (Tuition fees only) u/s 60 D

Children’s education expenses mentioned as tax deductions on salary income. People with taxable income under 1.5 million Rupees are qualified for the allowance. Education cost qualified for the allowance is Lower of

  • 5% of the educational expense paid or
  • 25% of the taxable income or
  • 60,000 increased by the quantity of kids.

FBR IRIS allows the stipend can be asserted by both guardians. NTN or the name of the organization should be given. No concern for people who working in large organization and acquiring under 84,000 every month would be probably not going to send their children to those institutions.

Employers should not take in to account this allowance while withholding tax from salary payments u/s 149 so the individual will be required to go through refund process (if he has no other income), oh just forget the allowance.

Profit on Debt u/s 60 C

Special deductions/ tax credits are available for interest paid on house loans, investments in specified shares/ payment of insurance premium etc. Interest (benefit, markup, lease share) paid on obligation for a house advance is deductible allowance. The premium sum qualified for allowance is lower than the sum paid or half of taxable income (apparently after derivations u/s 60) or 2,000,000 rupees.

Medical allowance/expenses:

Medical allowance is an employees benefit. Reimbursement of expenses on medical treatment or hospitalization or both received by an employee is exempt from tax. Medical allowance of up to 10% of basic salary is exempt if the facility of reimbursement of medical expenses is not available to the employee.

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