Tax term

Tax credit

A legally permitted amount that directly reduces calculated tax.

Subtracting from tax rather than from income is what separates a credit from a deduction, and the difference shows in rupees on the same salary. Pakistani readers encounter credits through pension-related relief, donation relief and tax already collected by an agent. The tax-saving planner here models that arithmetic using rates and caps you enter, because no unverified percentage is hardcoded in it, and it stops the total credit at the computed tax, which is the practical point. On a 2026-27 salary of Rs 1,800,000 producing Rs 72,000 of schedule tax, a credit of Rs 20,000 leaves Rs 52,000, while a credit of Rs 90,000 leaves nil rather than a cheque from the mechanism itself. Refundable and adjustable are separate legal ideas with separate consequences. Keep the certificate or receipt behind each claim, enter it in the field that matches its nature, and confirm eligibility and cap with FBR.

Check the legal meaning in context and against the relevant tax year.