FBR Confirms Withdrawal of 25% Income Tax Rebate for Researchers & Teachers–LTO Karachi Issues Clarification Notification

No More 25% Tax Rebate for Teachers & Researchers: Official Clarification Issued:

In a recent development, the Large Taxpayers Office (LTO) Karachi has issued an official clarification regarding the discontinuation of the 25% income tax rebate previously available to researchers and full-time teachers. The Institute of Business Administration (IBA) Karachi had formally requested clarification on this matter, leading to an official response from the Commissioner Inland Revenue (Zone-1), LTO Karachi.

According to the clarification, the rebate was removed through the Finance Act 2022, which took effect from July 1, 2022. The omission of clause (2) of Part-III of the Second Schedule to the Income Tax Ordinance, 2001 means that teachers and researchers can no longer claim this tax benefit.

This update significantly impacts faculty members and researchers across universities, colleges, and research institutions, as they will now be subject to the full applicable income tax rates. The decision has sparked concern within the academic community, as it adds to the financial burden on professionals in the education sector. For the official government notification, please refer to the details below:

COMMISSIONER INLAND REVENUE
(ZONE-1)
LARGE TAXPAYERS OFFICE KARACHI

No.CIR/Zone-I/LTO/KHI/2024-25/918                                                                                                                                                                                                Dated: 17.03.2025

INSTITUTE OF BUSINESS ADMINISTRATION
University Enclave, Main Campus University Road Karachi,
Gulshan-e-Iqbal
KARACHI

SUBJECT:             CLARIFICATION REGARDING THE DISCOUNTINUATION OF 25% REBATE FOR RESEARCHERS AND FULL-TIME TEACHERS

                              Kindly refer to your letter No. IBA/MC/FIN/2315/2025 dated 22.01.2025 on the subject cited above wherein you have requested to provide clarification regarding discontinuation of 25% rebate for researchers and full time teachers.

2.                           The matter has been examined and I am directed to inform that through the Finance Act, 2022 (applicable from 1^st July, 2022) clause (2) of Part-III of Second Schedule to the Income Tax Ordinance, 2001 has been omitted. Therefore, the rebate of 25% for researchers and full time teacher is no longer available effective 1^st July, 2022 and onwards.

Deputy Commissioner-IR (HQs)

How the Discontinuation of 25% Tax Rebate Affects Teachers & Researchers in Pakistan:

The discontinuation of the 25% income tax rebate for teachers and researchers has raised concerns within the academic and research community. With the Finance Act 2022 removing this provision, professionals in the education sector must now adjust to higher tax liabilities.

The withdrawal of this rebate comes at a time when education and research play a critical role in national development. Many stakeholders believe that offering tax incentives could encourage professionals to remain in academia and contribute more effectively to research and innovation.

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