Chairman of the Federal Board of Revenue (FBR), Rashid Mahmood Langrial, informed the National Assembly’s Standing Committee on Finance on Saturday that the International Monetary Fund (IMF) has rejected FBR’s proposal to grant a 25% tax exemption to teachers and researchers starting from July 1, 2025.
The FBR Chairman told the committee that the IMF was approached twice regarding this proposal, but it did not agree. The IMF seeks uniformity in the tax system and did not permit the proposed tax relief for teachers and researchers. However, the government may provide subsidies through the budget if it chooses to do so.
Member of the National Assembly Nafisa Shah suggested that the government could provide relief to teachers in the form of a special allowance. However, Minister of State for Finance Bilal Azhar Kayani expressed regret, stating that the government does not have fiscal space in the 2025–26 financial year.
The Standing Committee approved the revised procedure for arrests in tax fraud cases, which had already been approved by the Senate Standing Committee on Finance.
The FBR Chairman said that the FBR has its own detention centers (jails) where individuals involved in tax fraud can be held, and other prisons can also be utilized. To prevent misuse of arrest powers in tax fraud cases, the government has introduced four key conditions.
He explained that the first condition would be the risk of the accused fleeing, in which case an arrest may be made with the approval of three senior members, including the FBR Member Inland Revenue (Operations) and Member Legal. The second condition is the risk of tampering with evidence. The third condition is that the amount involved in tax fraud is Rs. 50 million or more. The fourth condition is that three notices must have been issued to the individual, and no response was received.
The FBR Chairman further said that the clause related to income tax on pensioners’ income has been removed from the Income Tax Ordinance, and now tax will only apply to pensions exceeding Rs. 10 million.
The committee recommended increasing the withholding tax rate on cash withdrawals by non-filers from 0.6% to 0.8%, but rejected the Senate’s recommendation to raise it to 1%.
Regarding salaried individuals, the FBR Chairman said that where the annual taxable income exceeds Rs. 600,000 but is less than Rs. 1.2 million, only 1% income tax will be applied.
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