Karachi, September 11, 2024 – The Federal Board of Revenue (FBR) has announced that education expenses will continue to be deductible against income tax liability for the tax year 2024-25.
The FBR confirmed this under Section 60D of the updated Income Tax Ordinance, 2001, which was revised up to June 30, 2024. This provision is aimed at providing financial relief to taxpayers by allowing a portion of tuition fees to be deducted from their taxable income.
The FBR clarified that the facility is available for individuals whose taxable income falls below PKR 1.5 million annually. The deductible allowance applies to tuition fees paid during the tax year, offering families the opportunity to lower their tax burden through education-related expenses.
Breakdown of Section 60D
Under Section 60D, the following guidelines govern the deductible allowance:
1. Eligibility: Every individual is entitled to a deduction for tuition fees paid during a tax year, provided their taxable income does not exceed PKR 1.5 million.
2. Maximum Deduction: The deductible amount is determined by the lesser of the following:
o 5% of the total tuition fees paid during the year.
o 25% of the individual’s taxable income for the year.
o A fixed amount of PKR 60,000 per child multiplied by the number of children.
3. Non-Carry Forward of Deduction: If the deductible allowance exceeds the individual’s tax liability in any given year, the excess cannot be carried forward to future tax years. The deduction must be claimed within the relevant tax year.
4. Claiming the Deduction: Either parent who pays the tuition fees can claim the deduction, provided they submit the National Tax Number (NTN) or the name of the educational institution during the filing process.
5. Exclusion from Withholding Tax: The allowance is independent of the tax deduction at source under Section 149 (salary income), meaning it will not affect the computation of tax deducted from an individual’s salary.
Continued Tax Relief for Families
This provision, originally introduced in previous fiscal years, is part of the FBR’s efforts to support lower- and middle-income families in Pakistan, particularly those who bear significant education costs. By allowing a portion of tuition fees to be offset against income tax, the FBR aims to ease the financial burden on parents and encourage higher education for their children.
The continuation of this tax relief measure in 2024-25 signals the government’s ongoing commitment to providing fiscal incentives that align with the rising costs of education in the country. Families who meet the eligibility criteria are advised to maintain proper documentation of tuition fee payments to ensure compliance and maximize their allowable deductions.
