Karachi, January 9, 2024 – The Federal Board of Revenue (FBR) has recently announced a tax exemption on various perquisites granted to employees by virtue of their employment.
The development comes as part of the updated Income Tax Ordinance, 2001, for the tax year 2024, providing relief to the workforce in specific aspects.
The FBR has specifically outlined the perquisites eligible for tax exemption, aiming to alleviate the financial burden on employees. According to the latest amendments, the following perquisites received by an employee due to their employment will now be exempt from income tax:
1. Free or Subsidized Food: Employees benefiting from free or subsidized food provided by hotels and restaurants during duty hours will no longer be required to pay taxes on this benefit. This provision is expected to particularly benefit individuals in sectors where such arrangements are a common practice, enhancing the overall work environment.
2. Free or Subsidized Education: Another significant exemption covers free or subsidized education provided by educational institutions to the children of employees. This move recognizes the importance of education as a crucial component of employee well-being and seeks to support families in meeting educational expenses.
3. Free or Subsidized Medical Treatment: Employees receiving free or subsidized medical treatment from hospitals or clinics endorsed by their employers will also enjoy tax relief. This particular exemption is likely to be welcomed by those working in sectors where health benefits are a standard part of the employment package.
4. Other Perquisites with No Marginal Cost: The FBR has introduced a comprehensive provision that encompasses any other perquisite or benefit for which the employer does not have to bear any marginal cost. This opens the door to a broader range of exemptions, providing flexibility in addressing diverse employee benefits.
The FBR’s decision to grant tax exemptions on these perquisites underscores the recognition of the importance of employee welfare and the role it plays in fostering a healthy and productive work environment. By alleviating the tax burden on these specific benefits, the government aims to encourage employers to invest in the well-being of their workforce, ultimately contributing to overall economic growth.
This announcement comes at a time when businesses and employees are navigating challenges arising from global uncertainties and economic fluctuations. The FBR’s initiative is expected to positively impact both employers and employees, promoting a more favorable work culture and potentially improving retention rates.
It is essential for employers and employees alike to familiarize themselves with the updated Income Tax Ordinance, 2001, to ensure compliance with the latest regulations. Additionally, businesses are encouraged to explore innovative ways of enhancing employee benefits within the framework of the newly granted tax exemptions.
The FBR’s move to grant tax exemption on specific employee perquisites reflects a proactive approach to fostering a conducive work environment. As businesses adapt to evolving economic landscapes, this measure is poised to contribute to the overall well-being of the workforce and stimulate positive developments in the employment sector.
