Tax term

Tax liability

The amount of tax legally due after applying relevant rules and credits.

Liability is the tax legally due for a year after the schedule, the conditions and the permitted credits have been applied, and it is a different object from a calculator output. The estimator here annualises pay, adds taxable bonus and allowances, subtracts only the deductions you enter, applies that year’s bands and divides by twelve for a monthly average; every figure it shows is an estimate for verification with FBR. Reconciliation is the useful habit. Take a 2026-27 salary of Rs 1,800,000 estimated at Rs 72,000 against certificates showing Rs 78,000 deducted: before expecting anything, identify whether the gap is a bonus projection, a second employer, a revised forecast or a reporting error. The mistake is reading a screen total as an assessment, or assuming a nil estimate means no return. Compare annual certificates, keep receipts for every credit, and confirm the final position with FBR.

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