Reducing Your Tax Burden Is Easy
Tax Credit is a kind of concession by reduction in tax liability offered by the Government to Tax Payers with the objective to promote disciplined savings & investment culture.
The tax benefit is in addition to the return generated from the investments in our Funds.
Invest in ABL Pension Funds to Enjoy Greater Tax Savings
Your investment in ABL Funds’ entitles you to avail tax benefits and maximize the overall return on your investments.
Step 1: Invest in ABL Pension Funds up to your tax ceiling between July – June
- Invest upto maximum of 20% of taxable income in ABL Pension Funds1
Step 2: Claim Tax Credit on your investment for FY 2022 – 2023
The amount of tax credit you can get is dependent on:
- Your income tax rate
- The amount you wish to invest
How to Avail Tax Credit Facility
To claim your tax credit amount you just need to do following:
- As a Salaried individual, you can inform your HR or Finance Department about your investments by submitting the account statement to adjust your tax credit amount from the monthly income tax deductions.
- As a Self-employed individual you can adjust your tax payable by showing investment in your wealth statement at the time of Income tax return filing.
The benefits shown in the following table are calculated as an illustration based on maximum Investments subject to respective income brackets as defined in ITO, 2001.
Salaried Individual
| S.# | Annual Taxable Income (ATI) | Tax Amount (as per Tax Law) | Effective Tax Rate % | Permissible Investment for Tax Credit (PKR) Pension Fund (20% of ATI). |
Tax Credit (PKR) Through Pension Fund (as per sec 63) |
|---|---|---|---|---|---|
| 1 | 650,000 | 1,250 | 0.19% | 130,000 | 250 |
| 2 | 1,000,000 | 10,000 | 1.00% | 200,000 | 2,000 |
| 3 | 1,200,000 | 15,000 | 1.25% | 240,000 | 3,000 |
| 4 | 1,500,000 | 52,500 | 3.50% | 300,000 | 10,500 |
| 5 | 2,000,000 | 115,000 | 5.75% | 400,000 | 23,000 |
| 6 | 2,500,000 | 185,000 | 7.40% | 500,000 | 37,000 |
| 7 | 3,000,000 | 285,000 | 9.50% | 600,000 | 57,000 |
| 8 | 3,500,000 | 385,000 | 11.00% | 700,000 | 77,000 |
| 9 | 4,000,000 | 505,000 | 12.63% | 800,000 | 101,000 |
| 10 | 5,000,000 | 755,000 | 15.10% | 1,000,000 | 151,000 |
| 11 | 8,000,000 | 1,655,000 | 20.69% | 1,600,000 | 331,000 |
| 12 | 10,000,000 | 2,305,000 | 23.05% | 2,000,000 | 461,000 |
| 13 | 15,000,000 | 4,005,000 | 26.70% | 3,000,000 | 801,000 |
Non Salaried
| S.# | Annual Taxable Income (ATI) | Tax Amount (as per Tax Law) | Effective Tax Rate % | ||
|---|---|---|---|---|---|
| Permissible Investment for Tax Credit (PKR) Pension Fund (20% of ATI) |
Tax Credit (PKR) Through Pension Fund (as per sec 63) |
||||
| 1 | 650,000 | 2,500 | 0.38% | 130,000 | 500 |
| 2 | 1,000,000 | 35,000 | 3.50% | 200,000 | 7,000 |
| 3 | 1,500,000 | 112,500 | 7.50% | 300,000 | 22,500 |
| 4 | 2,000,000 | 200,000 | 10.00% | 400,000 | 40,000 |
| 5 | 2,500,000 | 292,500 | 11.70% | 500,000 | 58,500 |
| 6 | 3,000,000 | 405,000 | 13.50% | 600,000 | 81,000 |
| 7 | 4,000,000 | 680,000 | 17.00% | 800,000 | 136,000 |
| 8 | 5,000,000 | 1,005,000 | 20.10% | 1,000,000 | 201,000 |
| 9 | 8,000,000 | 2,030,000 | 25.38% | 1,600,000 | 406,000 |
| 10 | 10,000,000 | 2,730,000 | 27.30% | 2,000,000 | 546,000 |
| 11 | 15,000,000 | 4,480,000 | 29.87% | 3,000,000 | 896,000 |
| 12 | 20,000,000 | 6,230,000 | 31.15% | 4,000,000 | 1,246,000 |
| 13 | 30,000,000 | 9,730,000 | 32.43% | 6,000,000 | 1,946,000 |
Note:
1As per Section 63 of Income Tax Ordinance, 2001, an individual investor of pension fund scheme can claim tax credit subject upto maximum of 20% of current year’s taxable income.
Disclaimer:
All investments in pension funds are subject to market risks. Past performance is not necessary indicative of the future results. Please read the Offering Document to understand the investment policies and risks involved. Investors are expected to seek independent advice so as to determine the tax saving from investment in and voluntary pension schemes.
Frequently Asked Questions
A tax credit is a kind of tax saving that you can get on your income tax for the year if you invest in pension schemes. This tax savings facility can be availed by both salaried and self-employed individuals in accordance with the Income Tax Ordinance, 2001.
The amount of tax credit that you will be entitled to will be adjusted from your payable annual income tax for the year thus giving you an overall tax saving. The following illustrations will help you understand how a tax credit is calculated.
On an Investment in a Voluntary Pension Scheme
For example, if you are a salaried individual with an annual taxable income for the year of Rs. 2,000,000; your average tax rate will be 5.75%. If you invest, maximum permissible amount of Rs. 400,000 in a pension scheme, you will be entitled to a tax credit of Rs. 23,000/-.
The maximum tax benefit that an individual can get up to 20% of his or her annual taxable income times his or her tax rate.
The amount of tax credit that you can get on an investment in a pension scheme is dependent on a) the amount of investment you make and b) your annual taxable income.
In case of investment in a pension scheme, you need to hold your investment for at least one year to be eligible to claim a tax credit. However, if you withdraw any amount from your investment in a pension scheme before your preselected retirement date then a tax penalty will be charged which will be equivalent to your average tax rate of last 3 years.
The amount of tax credit you can get is dependent on your income tax rate and the amount you wish to invest. Use our Tax Savings Calculator to find out how much tax credit you can get.
Tax credit can be availed only in Voluntary Pension Schemes as per section 63 of ITO, 2001.