The Income Tax Ordinance, 2001 allows a tax credit for people who contribute to a pension fund during the tax year 2025-26. Section 63 of the updated law explains how this benefit works for salary earners. An eligible person earning income under the head “Salary” or “Business” can claim a tax credit for contributions made to an approved pension fund under the Voluntary Pension System Rules, 2005. The tax credit is calculated with the formula: (A/B) × C • A = the tax assessed before any credits. • B = the person’s taxable income. • C = the lesser of: o the actual contribution to the pension fund during the year, or o 20% of taxable income for that year. For individuals who join a pension fund at the age of 41 or above (during the initial ten years from July 1, 2006), an…