ISLAMABAD: The International Monetary Fund (IMF) has rejected the Federal Board of Revenue’s (FBR) proposal to allow a 25 percent tax rebate for teachers and researchers, effective from July 1, 2025. This was confirmed by FBR Chairman Rashid Mahmood Langrial to the National Assembly Standing Committee on Finance.
Chairman Langrial informed the committee that the FBR had approached the IMF twice regarding this tax relief, but the Fund has not agreed, citing its policy of tax harmonization. He clarified that while a tax rebate is not permissible, the government could potentially provide a subsidy from its budget if fiscal space allows. MNA Nafeesa Shah suggested that the government could consider offering a special allowance to teachers as an alternative. However, State Minister of Finance Bilal Azhar Kayani expressed regret, stating that there is no available fiscal space in the 2025-26 budget.
Revised Tax Fraud Arrest Procedures Approved
In another significant development, the National Assembly Standing Committee on Finance approved the revised procedure for arrests in cases of tax fraud, aligning with the earlier approval by the Senate Standing Committee on Finance.
The FBR Chairman elaborated on the new safeguards incorporated to prevent the misuse of powers related to arrests for tax fraud:
Fear of Escape: An accused of tax fraud would be arrested only where there was a fear of their escape. This action would require the approval of three Board members, including FBR Member IR (Operations) and FBR Member Legal.
Tampering of Proof: Tampering with evidence could be a second reason for arrest.
High Tax Fraud Amount: Tax fraud amounting to Rs50 million or more would be a third condition for arrest.
Non-Responsiveness to Notices: Arrest would be possible only if an individual received three notices but failed to respond.
Chairman Langrial also informed the committee that the FBR possesses its own jails for individuals involved in tax fraud and can utilize other existing jails for this purpose.
Pension and Cash Withdrawal Taxation
Regarding pension income, the FBR Chairman confirmed that the relevant clause for income tax exemption to pensioners has been deleted from the Income Tax Ordinance. This change allows for the taxation of pensions exceeding Rs10 million, while pensions below this threshold remain exempt.
The committee recommended increasing the withholding tax on cash withdrawals from banks by non-filers from 0.6 percent to 0.8 percent. However, it rejected the Senate Standing Committee on Finance’s proposal to raise this tax rate further to 1 percent.
On the taxation of salaried individuals, the FBR chairman reiterated that only one percent tax would be applicable on salaried individuals whose taxable income exceeds Rs600,000 but does not exceed Rs1,200,000, aligning with the relief announced by the Finance Minister.
