Written by Shahnawaz Akhter in Taxation Islamabad, September 17, 2025 – The Federal Board of Revenue (FBR) has announced that Zakat will continue to be treated as a deductible allowance for taxpayers during the tax year 2025-26. The provision is part of the updated Income Tax Ordinance, 2001, which reaffirms the government’s policy of extending relief to individuals who contribute through Zakat under the Zakat and Ushr Ordinance, 1980. According to Section 60 of the Ordinance, a taxpayer is entitled to claim a deductible allowance equal to the amount of Zakat paid during a tax year. This allowance can be adjusted while calculating taxable income, thereby lowering the overall tax liability of the payer. However, the law clearly specifies that the benefit is only available when Zakat is paid in accordance with the prescribed legal framework. The section further…