Gratuity to be treated as salary for tax matters

KARACHI: Federal Board of Revenue (FBR) has said that gratuity received by an employee during his lifetime shall be treated as salary income and will be subject to tax under Income Tax Ordinance, 2001.

Officials at the FBR said that where any gratuity is paid to an employee during his life-time, the gratuity shall be treated as salary paid to the employee for the purposes of this Ordinance.

They further said that if a gratuity fund for any reason ceases to be an approved gratuity fund, the trustees of the fund shall nevertheless remain liable to tax on any gratuity paid to any employee.

Where any contributions by an employer (including the interest thereon, if any,) are repaid to the employer, the amount so repaid shall be deemed for the purposes of tax to be the income of the employer of the income year in which they are so repaid.


  1. Dear SyedAli, can you please share the sources or any video in which they are saying or any press release/SRO/ notification letter/ammendment letter.

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