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Retiree Tax Filing Guide Pakistan (TY 2025-26)

Pension paid to retired employees is fully exempt from income tax in Pakistan under Second Schedule Part I Clause 8 - regardless of source (government, private, foreign). Most retirees can file a NIL or near-NIL return, but the wealth statement is still required, and filing keeps you on the ATL for future banking and property transactions.

Key rules for retirees

Pension income is fully exempt

Section 8 of Second Schedule Part I. Government pension, private employer pension, foreign pension - all exempt for the retired employee. Commuted pension (lump sum) up to 50% of entitlement is also exempt.

Behbood / PBA taxed at 5% flat

Behbood Savings Certificates and Pensioner's Benefit Account income taxed at 5% flat for senior citizens above 60 - lower than the standard Section 151 rates. Regular savings account interest still at standard rates.

Wealth statement still required

Section 116 - every filing individual owes a wealth statement. Even if pension is fully exempt and your return is effectively NIL, you still list assets (property, gold, cash, bank, vehicles) and liabilities.

Your filing timeline

  1. August
    Gather income certificates

    Pension statement from ex-employer / accountant general, bank statement showing Behbood / PBA interest, any rental income statement.

  2. T-14 days
    Wealth statement inventory

    Property FBR notified value, gold at current PKR/gram, bank balances at 30 June, vehicles at insurance-declared value, any foreign assets.

  3. T-7 days
    Draft return

    Wizard's Setup step has a retiree flag. Pension income flows into exempt section; wealth statement is fully editable.

  4. T-3 days
    Submit on IRIS

    Fast - most retirees have a straightforward return. NIL or near-NIL final tax after pension exemption.

Tools you'll use

Wealth Statement Checker

Balance opening vs closing net worth. Especially important for retirees drawing down accumulated wealth.

Open
Do I Need to File? Quiz

Confirms whether filing is mandatory in your situation.

Open
Filing Wizard

Retiree-friendly path with pension exemption baked in.

Open

Related reading

How to file your Pakistan tax return

Full filing walkthrough.

Frequently asked

Is pension taxable in Pakistan?
No - pension paid to a retired employee is fully exempt under Second Schedule Part I Clause 8. This includes government pension, private employer pension, and foreign pension. Family pension to a widow / dependant after the employee's death is also exempt.
Do I need to file if my only income is pension?
Legally, if pension is your only income and it's fully exempt, you have no tax liability. But if you meet any Section 114 trigger (own NTN, own 500+ sq yards property, own 1000cc+ vehicle), filing is still required. NIL filing to stay on the ATL is recommended regardless.
How is Behbood interest taxed?
Behbood Savings Certificates and Pensioner's Benefit Account interest for senior citizens (60+) is taxed at 5% flat - lower than the standard Section 151 rates (15-20%). Applied at source by National Savings.
What about my property income after retirement?
Rental income remains taxable at slab rates under Section 15. WHT deducted by tenants (Section 155) is adjustable against final liability. Property held for capital appreciation is subject to Section 37(1A) CGT on sale.

Ready to file?

The Easy Tax wizard has a dedicated path for retirees. 20-30 minutes to a complete IRIS-coded draft.

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