Karachi, July 13, 2023 – The Federal Board of Revenue (FBR) has announced an extension of income tax exemption totaling Rs12.24 billion on pensions disbursed to civil servants and military personnel.
As per the recently released FBR report on tax expenditure for the year 2023, this significant tax exemption has been granted to pension recipients from the federal government, provincial government, armed forces, as well as their families and dependents.
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The tax exemption has been authorized under Clause 9 of Part 1 of the Second Schedule of the Income Tax Ordinance, 2001. This provision aims to alleviate the tax burden on individuals receiving pensions from the specified sources mentioned above.
Additionally, the report highlights that an additional amount of Rs3.63 billion has been granted as exemption to pensioners who receive their pensions through any pension scheme approved by the revenue board. This exemption pertains to payments related to commutation of pension received from the government or any approved pension scheme, and it falls under Clause 12 of Part 1 of the Second Schedule of the Income Tax Ordinance, 2001.
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Furthermore, the FBR has extended a tax exemption of Rs900 million to recipients of gratuity payments. This exemption applies to any income received in the form of gratuity or commutation of pension by an employee upon retirement or, in the unfortunate event of their death, by their heirs.
The tax exemptions on civil and military pensions and gratuity payments aim to provide financial relief to retired individuals and their families. These measures acknowledge the contributions and sacrifices made by civil servants, military personnel, and their beneficiaries throughout their careers in public service.
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The FBR’s decision to extend these tax exemptions underscores the government’s commitment to supporting and honoring its retired employees. By alleviating the tax burden on pensions and gratuity payments, the FBR aims to enhance the financial well-being and security of those who have dedicated their lives to serving the nation.
These tax exemptions are expected to have a positive impact on the pensioners’ livelihoods, ensuring a more comfortable and stable future for them and their families.
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