Is there still a 50% tax reduction or a separate tax slab for senior citizens aged 60 or above?

What did the old senior citizen rule say?

It said that a taxpayer aged 60 or more paid half the tax, if their income was modest. Clause (1A) of Part III of the Second Schedule to the Income Tax Ordinance, 2001 read, as quoted in the footnote of the consolidated text:

“(1A) Where the taxable income [other than income on which the deduction of tax is final], in a tax year, of a taxpayer aged [60] years or more on the first day of that tax year does not exceed [one million] rupees, his tax liability on such income shall be reduced by 50%.”

Part III is headed “Reduction in tax liability”, and this was one of its reductions. It had three limits: age 60 on the first day of the tax year, taxable income not above one million rupees, and no reduction on income already taxed by final deduction.

Is that rule still in force?

No. Section 7 of the Finance Act, 2014, amending Part III of the Second Schedule, says “clause (1A) shall be omitted”. The consolidated Ordinance amended to 30 June 2026 shows clause (1A) as an empty bracket with the old wording only in a footnote. Older FBR press releases and articles describing a 50% senior citizen rebate refer to this omitted clause.

Is there a separate slab for people over 60 in tax year 2027?

No. For tax year 2027 (1 July 2026 to 30 June 2027) Division I of Part I of the First Schedule has two tables for individuals, and neither mentions age.

Clause (2), where salary exceeds seventy-five per cent of taxable income:

Taxable income	Rate of tax
Up to Rs. 600,000	0%
Rs. 600,000 to Rs. 1,200,000	1% of the amount exceeding Rs. 600,000
Rs. 1,200,000 to Rs. 2,200,000	Rs. 6,000 + 11% of the amount exceeding Rs. 1,200,000
Rs. 2,200,000 to Rs. 3,200,000	Rs. 116,000 + 20% of the amount exceeding Rs. 2,200,000
Rs. 3,200,000 to Rs. 4,100,000	Rs. 316,000 + 25% of the amount exceeding Rs. 3,200,000
Rs. 4,100,000 to Rs. 5,600,000	Rs. 541,000 + 29% of the amount exceeding Rs. 4,100,000
Rs. 5,600,000 to Rs. 7,000,000	Rs. 976,000 + 32% of the amount exceeding Rs. 5,600,000
Above Rs. 7,000,000	Rs. 1,424,000 + 35% of the amount exceeding Rs. 7,000,000

Clause (1), other individuals and associations of persons:

Taxable income	Rate of tax
Up to Rs. 600,000	0%
Rs. 600,000 to Rs. 1,200,000	15% of the amount exceeding Rs. 600,000
Rs. 1,200,000 to Rs. 1,600,000	Rs. 90,000 + 20% of the amount exceeding Rs. 1,200,000
Rs. 1,600,000 to Rs. 3,200,000	Rs. 170,000 + 30% of the amount exceeding Rs. 1,600,000
Rs. 3,200,000 to Rs. 5,600,000	Rs. 650,000 + 40% of the amount exceeding Rs. 3,200,000
Above Rs. 5,600,000	Rs. 1,610,000 + 45% of the amount exceeding Rs. 5,600,000

A 65-year-old and a 35-year-old with the same taxable income from the same source pay the same tax under these tables.

What age rule is left?

Only one, and it is about pension. Section 12(2A)(i), inserted by the Finance Act, 2025, charges pension from a former employer under a separate pension table (0% up to ten million rupees a year, 5% of the amount above that), and adds that “the individual who has attained the age of seventy years shall not be charged to tax on pension income”. Section 149(1A) matches this: the payer deducts tax only for a former employee “below the age of seventy years” whose pension for the year exceeds ten million rupees.

The age-70 rule applies to pension income alone. Rent, business profit, profit on savings and other income of a person over 70 are taxed like anyone else’s.

Worked example (illustrative figures)

Case 1. Ghulam Rasool, 66, retired and now runs a small stationery shop in Sialkot. His taxable income from the shop for tax year 2027 is Rs. 1,000,000, and he has no salary.

1. Clause (1) applies, because he is not a salaried individual.
2. Rs. 1,000,000 falls in the Rs. 600,000 to Rs. 1,200,000 band.
3. Tax: 15% x (Rs. 1,000,000 - Rs. 600,000) = 15% x Rs. 400,000 = Rs. 60,000.
4. No age reduction applies. Under the omitted clause (1A), a taxpayer of his age with income not above one million rupees would have had the liability reduced by 50%. That clause no longer exists.

Case 2. Zubaida, 72, a retired schoolteacher in Peshawar, receives a pension of Rs. 1,500,000 for the year from her former employer. Under section 12(2A)(i) she is not charged to tax on that pension, because she has attained seventy. If she also earned profit on a bank deposit, that profit would be taxed under its own rules regardless of her age.

What if I am between 60 and 70 and receive a pension?

Your pension still goes through the pension table in the First Schedule: 0% on pension up to ten million rupees in the tax year and 5% of the amount above that. Most pensioners in this age range therefore pay no tax on pension, but that is because of the pension table, not because of age.

Common mistakes

• Relying on an old press release. The 50% reduction for those aged 60 or more was omitted by the Finance Act, 2014.
• Expecting a lower slab at 60 or 65. Division I contains no age-based rows or tables.
• Stretching the age-70 rule to all income. Section 12(2A)(i) speaks only of “pension income”.
• Confusing the savings cap with an age benefit. The 5% cap in clause (6) of Part III on Bahbood Savings Certificate and Pensioners Benefit Account profit is tied to those products, not to the investor’s age as such.

What to check in the official text

Read the footnote under Part III of the Second Schedule for the omitted clause (1A), section 7 of the Finance Act, 2014, the two tables in Division I of Part I of the First Schedule and the pension proviso after them, section 12(2A) and section 149(1A). Our site copy of the Ordinance does not reproduce the rate tables, so read them in the official PDF. Provincial taxes and any relief outside the Income Tax Ordinance are not covered here.