FBR Directs Higher Education Department Punjab to Amend SAP System for Tax Compliance-Notification

Discontinuation of 25% Tax Rebate for Teachers and Researchers: FBR Issues Directive:

The Federal Board of Revenue (FBR), Regional Tax Office, Rawalpindi, has issued a directive (No. 8997 dated January 8, 2025) addressed to the Secretary of the Higher Education Department, Punjab, regarding the incorporation of amendments in the SAP System to ensure compliance with changes brought forth by the Finance Act, 2022. Specifically, the omission of Clause 2, Part-III, Second Schedule of the Income Tax Ordinance, 2001, effective from the Tax Year 2023, discontinues the 25% tax rebate previously granted to full-time teachers and researchers in nonprofit educational and research institutions. This amendment aims to align the taxation structure with updated legislative provisions and prevent potential revenue loss to the national exchequer. The FBR emphasizes the need for immediate action to update the SAP System accordingly, ensuring accurate deductions and fostering collaboration between the Inland Revenue Department and the Higher Education Department. By implementing these changes, the directive seeks to strengthen tax compliance, improve revenue collection, and maintain transparency in the taxation process. Notification Describes;

FBR – PAKISTAN

Government of Pakistan
Federal Board of Revenue
Regional Tax Office, Rawalpindi

No. 3997

Dated: 08-01-2025

To

The Secretary Higher Education Department Punjab,
Lahore.

Subject :-       INCORPORATION OF AMENDMENT VIS – À – VIS REBATE DISALLOWANCE IN SAP SYSTEM.

Kindly refer to subject cited above.

2.         Through the Finance Act, 2022 applicable from the Tax Year 2023, Clause 2, Part-III, Second Schedule, of the Income Tax Ordinance, 2001 has been omitted. The said clause is reproduced here as,” (2) The tax payable by a full time teacher or a researcher, employed in a non profit education or research institution duly recognized by Higher Education Commission, a Board of Education or a University recognized by the Higher Education Commission, including government 1 [ ] research institution, shall be reduced by an amount equal to 1 [25]% of tax payable on his income from salary 1 [1] 1 [Provided that this clause shall not apply to teacher of medical profession who derive income from private medical practice or who receive share of consideration received from patients.]”

3.        During the analysis of data acquired from District Account office Rawalpindi, it has been ascertained that the said changes brought forth by Finance Act 2022 has not been implemented resulting in loss of revenue to national exchequer.

4.        In the view of above, SAP system be updated/upgraded to incorporate the required changes which would result in discontinuation of 25% rebate previously allowed to the abovementioned persons. Your Cooperation with Inland Revenue Department will be highly appreciated.

Chief Commissioner

Conclusion:

In conclusion, the directive from the FBR highlights the critical importance of updating the SAP System to reflect amendments introduced by the Finance Act, 2022. The discontinuation of the 25% tax rebate for full-time teachers and researchers underscores the government’s commitment to revising tax policies to enhance revenue collection and close loopholes that result in financial discrepancies. Compliance with these updated provisions is not only a legal obligation but also a step towards ensuring a fair and equitable taxation system. The Higher Education Department’s role in facilitating this implementation is crucial for achieving alignment with national tax policies. By updating the SAP System and adhering to the new regulations, the department can demonstrate its dedication to fostering transparency, accountability, and efficient governance. This collaborative effort between educational institutions and the Inland Revenue Department ultimately supports the broader objective of strengthening Pakistan’s fiscal framework and optimizing resource utilization for national development.

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