LIFE INSURANCE & TAKAFUL PAYOUTS · SECTION 7G
Insurance Tax Calculator Pakistan 2026-27
Work out tax on your life insurance or takaful payout under Section 7G — only the gain is taxed, not your full payout.
Death benefits and disability payouts are fully exempt. This calculator is for maturity / surrender payouts on savings-linked life or takaful policies.
Section 7G Tax Rates — FY 2026-27
| Holding Period | Tax Rate on Gain |
|---|---|
| Within 1 year | 15% |
| 1 to 4 years | 10% |
| More than 4 years | 0% (exempt) |
Tax applies only to the gain (payout minus premiums paid), not the full payout. Death benefits and disability-triggered payments are exempt regardless of how long the policy was held. Insurers and takaful operators withhold this tax at source under Section 151B.
Frequently Asked Questions
Is my life insurance payout taxable in Pakistan?
Only the gain on a maturity or surrender payout is taxable under Section 7G, and only if the policy was held for 4 years or less. Death benefits and disability payouts are always exempt, and gains on policies held over 4 years are also exempt.
How do I calculate tax on my insurance payout?
Subtract the total premiums you paid from your gross payout to find the gain, then apply 15% if held within 1 year, 10% if held 1–4 years, or 0% if held more than 4 years.
Who deducts this tax?
The insurance company or takaful operator withholds Section 7G tax at the time of paying you, under Section 151B, so you generally receive the payout net of tax already.
Where do QuickTaxPK's tax figures come from?
Rates are based on Section 7G of the Income Tax Ordinance 2001 as introduced by recent Finance Acts, last reviewed on 22 September 2026.