Written by Hamza Shahnawaz in Taxation The FBR has retained the provision allowing taxpayers to claim a deductible allowance for Zakat paid during Tax Year 2027, subject to the Income Tax Ordinance, 2001. ISLAMABAD: The Federal Board of Revenue (FBR) has retained the provision allowing taxpayers to claim a deductible allowance for Zakat paid during Tax Year 2027, subject to the conditions prescribed under the Income Tax Ordinance, 2001. The FBR has issued the Income Tax Ordinance, 2001, updated up to June 30, 2026, for Tax Year 2027, setting out the applicable provisions for taxpayers. Zakat deduction under Section 60 Under Section 60 of the Income Tax Ordinance, 2001, a person is entitled to a deductible allowance for the amount of any Zakat paid during a tax year under the Zakat and Ushr Ordinance, 1980. The provision applies to Zakat paid during the relevant tax year in accordance with the applicable Zakat law. However, Section 60(2) states that the provision does not apply to any Zakat amount already taken into account under sub-section (2) of Section 40 of the Income Tax Ordinance, 2001. Unused Zakat allowance cannot be carried forward The FBR has also specified how any unused Zakat allowance is treated. Under Section 60(3), an allowance or part of an allowance available under Section 60 for a tax year that cannot be deducted under Section 9 for that year cannot be refunded. The unused amount also cannot be carried forward to a subsequent tax year or carried back to a preceding tax year. The provision therefore limits the Zakat deduction to the relevant tax year, subject to the applicable requirements of the Income Tax Ordinance. Workers’ Welfare Fund deduction The updated…