Do I have to file an income tax return if my only income is pension?

What does the law say?

Section 114(1) of the Income Tax Ordinance, 2001 lists the persons who must file a return. It works as a checklist, and a retired person needs to pass through all of it, not only the question of how much tax the pension attracts. For an individual, the relevant parts are:

• Clause (ab): every person (other than a company) whose taxable income for the year “exceeds the maximum amount that is not chargeable to tax”.
• Clause (ae): “every person whose income for the year is subject to final taxation under any provision of this Ordinance”.
• Clause (b): any other person who meets one of a list of conditions, set out below.

Section 12(2A)(i) says pension “shall be charged to tax as a final tax” at the rates in the pension table in the First Schedule. For tax year 2027 that table charges 0% where the pension received does not exceed ten million rupees, and 5% of the amount exceeding ten million rupees where it does. The same sub-section says an individual who has attained the age of seventy years shall not be charged to tax on pension income.

Which conditions in section 114(1)(b) catch retirees?

Clause (b) applies to a person who:

Sub-clause	Condition, in the words of section 114(1)(b)
(i)	“has been charged to tax in respect of any of the two preceding tax years”
(ii)	claims a loss carried forward
(iii)	owns immovable property with a land area of five hundred square yards or more, or owns any flat, in the old municipal limits, a Cantonment or the Islamabad Capital Territory
(iv)	owns immovable property with a land area of five hundred square yards or more in a rating area
(v)	owns a flat with a covered area of two thousand square feet or more in a rating area
(vi)	“owns a motor vehicle having engine capacity above 1000 CC”
(vii)	“has obtained National Tax Number”
(viii)	holds a commercial or industrial electricity connection with an annual bill above five hundred thousand rupees
(ix)	is a resident registered with a chamber, trade body or professional body such as the Pakistan Bar Council or ICAP
(x)	is a resident individual required to file a foreign income and assets statement

Sub-clause (i) matters for people who retired recently. If tax was charged on your salary in tax year 2025 or 2026, the text requires a return for tax year 2027 on that ground alone. Sub-clause (vii) catches almost everyone who held an NTN while working.

What relief does section 115 give?

Section 115(3) says four classes of person are not required to file “solely by reason of” sub-clauses (iii), (iv), (v) and (vi) of section 114(1)(b):

• a widow;
• an orphan below the age of twenty-five years;
• a disabled person; and
• a non-resident person, in the case of ownership of immovable property.

The relief is narrow. It covers the property and car triggers only. A widow who holds an NTN, or who was charged to tax in either of the two preceding years, is still within clause (b) through sub-clause (vii) or (i).

Worked example (illustrative figures)

Rashida, 67, Lahore. A widow receiving a family pension of Rs. 85,000 a month, so Rs. 1,020,000 for tax year 2027. She owns a house on 600 square yards in a rating area and has never had an NTN.

1. Sub-clause (iv) would apply, because the land area is five hundred square yards or more.
2. Section 115(3)(a) removes that trigger for a widow.
3. No other sub-clause of clause (b) applies on these facts. Whether clause (ab) or (ae) applies to her pension is the open question discussed below.

Khalid, 63, Karachi. A retired bank officer with a pension of Rs. 150,000 a month (Rs. 1,800,000 a year), a 1300 CC car and the NTN he used while employed.

1. Sub-clause (vi) applies: engine capacity above 1000 CC.
2. Sub-clause (vii) applies: he has obtained an NTN.
3. He is not a widow, orphan or disabled person, so section 115(3) does not help. The text requires him to file, even though his pension falls in the 0% row of the pension table.

Tariq, 66, Islamabad. Pension of Rs. 900,000 a month, so Rs. 10,800,000 for the year.

1. The pension exceeds ten million rupees, so section 12(2A)(i) charges it as a final tax: 5% of Rs. 800,000 = Rs. 40,000.
2. His income is subject to final taxation, which is the wording of clause (ae). He is within section 114(1) on that ground.

What if I still work for my former employer?

Section 12(2A)(ii) says the pension of an individual who continues to work for the former employer or its associate is taxed at the ordinary rates in clause (1) or (2) of Division I. That pension is then added to salary and taxed on the slab table, which for tax year 2027 has a 0% row only where taxable income does not exceed Rs. 600,000. Above that, clause (ab) of section 114(1) applies in the ordinary way.

What if my pension is below ten million rupees?

This is where the text is not clear. Section 12(2A)(i) describes pension as charged “as a final tax” in wording that ties the final tax to an amount received that “exceeds ten million rupees”. It does not say whether a pension under that figure, taxed at 0%, is “income subject to final taxation” for clause (ae), or “taxable income” for clause (ab). The same doubt applies to a pensioner aged seventy or more, whom section 12(2A)(i) says shall not be charged on pension income. This page does not resolve it. For many retirees it will not matter, because a clause (b) trigger such as an NTN or a car already applies.

Common mistakes

• Treating a 0% pension as a reason not to file. The filing test in section 114 is separate from the rate. The clause (b) triggers apply whatever the pension.
• Assuming the widow relief covers everything. Section 115(3) switches off sub-clauses (iii) to (vi) only.
• Forgetting the two-year look-back. Tax charged on your last years of salary brings in sub-clause (i) for the two years that follow.
• Filing the return without a wealth statement. Section 116(2) says every resident individual filing a return shall furnish a wealth statement and wealth reconciliation statement with it.
• Thinking an old year is closed. Section 114(4) and (5) let the Commissioner require a return for one or more of the last five completed tax years, and up to ten where no return was filed for any of the last five.

What to check in the official text

Read section 114(1) in full, including clause (c), under which the Board may notify further persons or classes of persons who must file; this corpus does not hold those notifications. Read section 115(3) for the exact reliefs, section 12(2A) for the final tax wording, and the proviso to clause (2) of Division I of Part I of the First Schedule in the official PDF, since our site copy of the Ordinance leaves out rate tables. The prescribed return form and the FBR portal steps are outside this corpus.