Individual - Deductions

Last reviewed - 23 January 2024

Employment income exemptions

Significant exemptions available under salary income are as follows:

  • Medical allowance/expenses: Reimbursement of expenses on medical treatment or hospitalisation or both received by an employee is exempt from tax.
  • Medical allowance of up to 10% of basic salary is exempt if the facility of reimbursement of medical expenses is not available to the employee.

Personal deductions/credits

  • Special straight deduction is available for Zakat paid under the Zakat and Usher Ordinance.
  • A rebate at the average rate of tax is allowed on donations made to any approved non-profit organisation on the lower of donation value and 30% of the individual’s taxable income. In case of donations made by an individual to an associate, the amount of donations qualifying for tax credit would be restricted to 15% of the individual’s taxable income.
  • Donations to certain approved institutes that were earlier eligible for direct deduction from income have now been transposed into the tax credit regime. As a result, the overall upper limit for tax break for the donors, in respect of charitable donations, has been reduced.