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 who must file a return of income for a tax year. For an individual living on a pension, three parts matter:

• Clause (ab): a 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, whatever the size of the income.

The tax on the pension itself comes from section 12(2A)(i). Pension is charged “as a final tax” at the rates in the pension table in the First Schedule, and an individual who has attained the age of seventy years is not charged on pension income. For tax year 2027 (1 July 2026 to 30 June 2027) that table reads:

Pension received in the tax year	Rate of tax
Does not exceed ten million rupees	0% of the amount
Exceeds ten million rupees	5% of the amount exceeding ten million rupees

So the rate answers “how much tax”, and section 114 answers “must I file”. They are separate questions.

Which conditions catch people who retired years ago?

Clause (b) of section 114(1) covers a person who:

Sub-clause	Condition
(i)	“has been charged to tax in respect of any of the two preceding tax years”
(iii) to (v)	owns land of five hundred square yards or more in the listed areas or in a rating area, any flat in the listed areas, or a flat 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”

Sub-clauses (ii), (viii), (ix) and (x) cover carried-forward losses, large commercial electricity bills, membership of a chamber or professional body, and the foreign income and assets statement.

For someone who retired long ago, sub-clause (i) usually falls away once two full tax years pass without tax being charged. Sub-clause (vii) does not fall away. The text says “has obtained”, so an NTN taken out during working life keeps the condition met.

What relief does section 115 give?

Section 115(3) says a widow, an orphan below the age of twenty-five years, a disabled person and (for immovable property only) a non-resident person are not required to file “solely by reason of” sub-clauses (iii), (iv), (v) and (vi) of section 114(1)(b). The relief covers property and the car. It does not switch off the NTN condition, the two-year look-back, or clauses (ab) and (ae).

Worked example (illustrative figures)

Mr. Aslam, 64, Multan. Retired from a public sector company on 30 June 2023. Pension Rs. 110,000 a month, so Rs. 1,320,000 in tax year 2027. Owns a 1000 CC car. Holds the NTN he used while employed. Has not filed since tax year 2023.

1. Pension table: Rs. 1,320,000 does not exceed ten million rupees, so tax is 0%.
2. Sub-clause (i): the two tax years before 2027 are 2025 and 2026. His salary was charged in tax year 2023, so this condition is not met on these facts.
3. Sub-clause (vi): his car is 1000 CC, not “above 1000 CC”, so this condition is not met.
4. Sub-clause (vii): he has obtained an NTN. This condition is met, so section 114(1)(b) requires a return for tax year 2027.

Mrs. Shaheen, 70, Karachi. A widow on a family pension, owning a 1300 CC car and no NTN, with no tax charged in tax years 2025 or 2026. Sub-clause (vi) would apply, but section 115(3)(a) removes it for a widow. No other condition in clause (b) is met on these facts.

Mr. Qazi, 65, Islamabad. Pension Rs. 950,000 a month, so Rs. 11,400,000 for the year.

1. Amount above ten million: Rs. 11,400,000 - Rs. 10,000,000 = Rs. 1,400,000.
2. Tax at 5%: Rs. 1,400,000 x 5% = Rs. 70,000, charged as a final tax.
3. His income is subject to final taxation, which is the wording of clause (ae).

What if I stopped filing and never heard from FBR?

Section 114(4) lets the Commissioner, by written notice, require a person who in the Commissioner’s opinion was required to file but did not, to file within thirty days or another period in the notice. Section 114(5) limits this to the last five completed tax years, extended to the last ten where no return was filed for any of the last five, and removes the limit where the Commissioner records that the person has foreign income or foreign assets.

How does the Active Taxpayers List fit in?

Section 181A(1) says the Board “shall have the power to institute active taxpayers’ list”, and section 181A(2) says the list is regulated as prescribed. The Ordinance text does not set out the list’s rules, so this page does not describe them.

Section 114B is where the list meets the filing duty. It lets the Board issue an income tax general order against persons “not appearing on active taxpayers’ list but are liable to file return”. The order may disable mobile phones or SIMs, discontinue electricity or gas connections, or restrict foreign travel for citizens (with exclusions such as NICOP holders and persons going for Hajj or Umrah). Under section 114B(4), no one is included unless a section 114(4) notice was issued, its compliance date has passed and the return has not been filed. Section 114B(3) allows restoration once the return is filed or the person shows they were not liable.

Common mistakes

• Reading 0% as “no return”. The rate and the filing duty are separate. Section 114(1)(b) applies whatever the pension.
• Forgetting the old NTN. Sub-clause (vii) is met by having obtained an NTN, not by using it.
• Stretching the widow relief. Section 115(3) covers sub-clauses (iii) to (vi) only.
• Treating the list as the law. The duty comes from section 114; section 181A only creates the power to keep the list.

What to check in the official text

Read section 114(1), (4) and (5), section 115(3), section 114B and section 181A. Clause (c) of section 114(1) lets the Board notify further persons who must file; those notifications are not in this corpus. Whether a pension below ten million rupees, or the pension of a person aged seventy or more, counts as income “subject to final taxation” for clause (ae) is not stated in the text. The pension table is in the proviso to clause (2) of Division I of Part I of the First Schedule; read it in the official PDF, since our site copy leaves out tables. The rules regulating the Active Taxpayers List and the FBR portal steps are outside this page.