# Is the pension paid to the family of a government servant or soldier who died in service exempt?

Source: https://qanoondigest.com/faq/pensioners-senior-citizens/died-in-service-shaheed-family-pension
Law current to: 30 June 2026. Reviewed: 2026-09-25. Checked line by line against the law: not yet.

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## Short answer

Yes. Clause (9)(ii) of Part I of the Second Schedule exempts any pension granted under the relevant rules to the families and dependents of public servants or Armed Forces members who die during service. Clauses (16) and (17) separately exempt the special family pension, dependents pension and children's allowance paid to Shaheed families of the armed and civil armed forces.

**Applies to:** Widows, children and other dependents receiving pension because a public servant, soldier or civil armed forces member died while in service, including families of Shuhada.

## What does the law say?

Three clauses in Part I of the Second Schedule to the Income Tax Ordinance, 2001 deal with pension paid to a family after a death in service. Part I lists incomes that "shall be exempt from tax, subject to the conditions and to the extent specified".

**Clause (9)(ii)** exempts any pension "granted under the relevant rules to the families and dependents of public servants or members of the Armed Forces of Pakistan who die during service."

**Clause (16)** exempts any income derived by the families and dependents of the "Shaheeds" belonging to the Pakistan Armed Forces "from the special family pension, dependents pension or children's allowance granted under the provisions of the Joint Services Instruction No. 5/66."

**Clause (17)** gives the same exemption to the families and dependents of Shaheeds of the Civil Armed Forces of Pakistan "to whom the provisions of the Joint Services Instruction No. 5/66 would have applied had they belonged to the Pakistan Armed Forces", for "any like payment made to them".

Without these clauses, a pension would be income: section 12(2)(f) lists "any pension or annuity, or any supplement to a pension or annuity" as salary.

## Who is covered by each clause?

| Clause | Whose family | What is exempt |
|---|---|---|
| (9)(ii) | Public servants and members of the Armed Forces of Pakistan who die during service | Any pension granted under the relevant rules to the families and dependents |
| (16) | Shaheeds of the Pakistan Armed Forces | Special family pension, dependents pension or children's allowance under Joint Services Instruction No. 5/66 |
| (17) | Shaheeds of the Civil Armed Forces of Pakistan | Any like payment, where JSI 5/66 would have applied had they been in the Pakistan Armed Forces |

Clause (9)(ii) is the widest of the three. It does not require the death to be a Shaheed's death. A clerk in a federal ministry who dies of illness while still in service is within its words, because the test is that the person died "during service". The clause does not define "public servants" or limit the term to federal employees.

## How has the law changed?

Clause (9) used to be broader. Sub-clause (i) exempted pension "received in respect of services rendered by a member of the Armed Forces of Pakistan or Federal Government or a Provincial Government". The Finance Act 2025 omitted sub-clause (i), according to the footnote in the consolidated text. Only sub-clause (ii), for families of those who die during service, remains.

The same wording used to sit in a separate clause (18). The Finance Act, 2006 omitted clause (18) and substituted clause (9), so the family pension exemption continued under clause (9) rather than being dropped.

## Worked example (illustrative figures)

**Case 1.** Nasreen lives in Multan. Her husband, a Grade 14 assistant in a federal department, died of a heart attack while in service. She receives a family pension of Rs. 38,000 a month under the pension rules.

1. Annual family pension: Rs. 38,000 x 12 = Rs. 456,000.
2. Her husband died during service, and the pension is granted under the relevant rules, so clause (9)(ii) applies.
3. Taxable amount from the family pension: **Rs. 0**.

**Case 2.** Shazia's husband, a Lance Naik, was martyred on duty. She receives a special family pension of Rs. 45,000 a month and a children's allowance of Rs. 6,000 a month for each of their two children, both under JSI 5/66.

1. Special family pension: Rs. 45,000 x 12 = Rs. 540,000.
2. Children's allowance: Rs. 6,000 x 2 x 12 = Rs. 144,000.
3. Total: Rs. 540,000 + Rs. 144,000 = Rs. 684,000, all exempt under clause (16).

If Shazia also earns profit on a bank deposit, that profit is not a pension or allowance under JSI 5/66, and clause (16) does not cover it.

## What if my husband retired first and died later?

Clause (9)(ii) is written for families of those "who die during service". A family pension that begins after a pensioner's death in retirement is not described by those words, and sub-clause (i), which covered service pensions of government and armed forces members generally, was omitted in 2025. The Ordinance does not contain a separate exemption for that family pension in Part I, so this page does not treat it as exempt.

## What if the payment is a lump sum, not a pension?

The three clauses cover pension and, in clauses (16) and (17), the children's allowance. A lump sum paid after death, such as gratuity, commutation, a benevolent grant or a superannuation fund payment, is dealt with by other clauses of Part I, including clauses (13), (24) and (25).

## Common mistakes

- **Assuming every government pension is still exempt.** Clause (9)(i) was omitted by the Finance Act 2025. Clause (9)(ii) survives only for families of those who die during service.
- **Reading clause (16) as covering all income of a Shaheed family.** It covers income derived "from the special family pension, dependents pension or children's allowance". Rent, profit on savings and business income of the family are taxed under their own rules.
- **Forgetting clause (17).** Families of Civil Armed Forces Shuhada are covered for like payments, not only families of the Pakistan Armed Forces.

## What to check in the official text

Read clauses (9), (16) and (17) of Part I of the Second Schedule and the footnotes recording the omission of clause (9)(i) and clause (18). The "relevant rules" under which a family pension is granted, and Joint Services Instruction No. 5/66 itself, are not part of this corpus, so the terms of the pension and who counts as a dependent must be confirmed from those instruments or the pension sanctioning office.

## Frequently asked

### Is the family pension of a government employee who died in service taxable?

No. Clause (9)(ii) of Part I of the Second Schedule exempts any pension granted under the relevant rules to the families and dependents of public servants who die during service. The exemption covers the pension itself, not other income the family earns.

### Is the pension of a Shaheed's widow and children taxed?

Clause (16) exempts income that families and dependents of Shaheeds of the Pakistan Armed Forces derive from the special family pension, dependents pension or children's allowance granted under Joint Services Instruction No. 5/66. Clause (17) extends the same treatment to Shaheed families of the Civil Armed Forces for any like payment.

### Does clause (9)(ii) cover the widow of a retired officer?

The clause speaks of families of those who die during service. A person who retired and died later did not die during service, so the clause as written does not reach that family pension. Its treatment is a separate question.

## Citations

- [Income Tax Ordinance, 2001, Second Schedule, Part I, clause (9), sub-clause (ii)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30), as amended to 2026-06-30: "(ii) granted under the relevant rules to the families and dependents of public servants or members of the Armed Forces of Pakistan who die during service." Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf
- [Income Tax Ordinance, 2001, Second Schedule, Part I, clause (16)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30), as amended to 2026-06-30: "from the special family pension, dependents pension or children's allowance granted under the provisions of the Joint Services" Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf
- [Income Tax Ordinance, 2001, Second Schedule, Part I, clause (17)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30), as amended to 2026-06-30: "Any income derived by the families and dependents of the "Shaheeds" belonging to the Civil Armed Forces of Pakistan" Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf
- [Income Tax Ordinance, 2001, Second Schedule, Part I, clause (9), sub-clause (i) (omitted by the Finance Act 2025, footnote) and clause (18) (omitted by the Finance Act, 2006, footnote)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30), as amended to 2026-06-30 Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf
- [Income Tax Ordinance, 2001, section 12 (Salary)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30#12-salary), as amended to 2026-06-30: "any pension or annuity, or any supplement to a pension or annuity" Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf