Pensioners in Pakistan have received a significant tax exemption totaling Rs 43.61 billion on their income within a year, according to official records. The Federal Board of Revenue (FBR) disclosed these figures in its latest annual report for 2024, highlighting the tax relief granted to pensioners under the Second Schedule of the Income Tax Ordinance, 2001.
Tax Exemption under Clause 8
The report specifies that pensioners were granted an income tax exemption of Rs 2.39 billion under Clause 8 of the Second Schedule. This provision ensures that any pension received by a Pakistani citizen from a former employer is exempt from tax, provided that the individual is not still employed by the same employer or an associated entity. If a pensioner receives multiple pensions, the exemption applies to the higher amount.
Tax Exemption under Clause 9
Additionally, tax exemptions amounting to Rs 23.32 billion were provided under Clause 9 of the Second Schedule. This clause grants exemption to pensions received for services rendered in the Armed Forces of Pakistan, the Federal Government, or Provincial Governments. It also includes pensions provided to the families and dependents of public servants and military personnel who passed away during service.
Tax Exemption under Clause 12
The FBR further detailed that pensioners availed income tax exemptions worth Rs 17.90 billion under Clause 12 of the Second Schedule. This provision covers payments related to the commutation of pensions received from the government or under any FBR-approved pension scheme.
Impact of Tax Exemptions on Pensioners
These tax exemptions play a vital role in easing the financial burden on pensioners, ensuring they receive adequate financial support after retirement. The FBR emphasized that these provisions contribute significantly to the economic well-being of retired individuals, particularly those who depend entirely on their pension income.
Government’s Role and Future Plans
Recognizing pensioners as a vulnerable segment of society, these tax exemptions serve as an essential financial safeguard, enabling them to manage their expenses without excessive taxation. The FBR reaffirmed its commitment to maintaining and updating policies that provide tax relief to retired individuals from various sectors.
The report underscores the government’s role in prioritizing the financial stability of pensioners, acknowledging the importance of tax exemptions in sustaining their livelihoods. Moving forward, the FBR aims to enhance transparency and efficiency in granting these exemptions, ensuring that pensioners receive their entitled benefits without any administrative hurdles.
